Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair

Oral Answers to Questions — GERMANY (REUNIFICATION)

Mr. D. Healey: asked the Secretary of State for Foreign Affairs what recent steps he has taken to secure a conference concerning the reunification of Germany.

Mr. Warbey: asked the Secretary of State for Foreign Affairs whether he is now in a position to announce the proposals of the Government for the reunification of Germany, following the ratification of the Paris Agreements.

The Secretary of State for Foreign Affairs (Mr. Harold Macmillan): I have nothing to add to the reply I gave in answer to Questions by the hon. Member for Blackburn, East (Mrs. Castle) and the hon. Member for Pembroke (Mr. Donnelly) on 25th April, in which I set out the programme in full. All these matters have first to be discussed with the other Governments concerned. We act together.

Mr. Healey: In view of the growing anxiety in Western Germany about the prospects of German reunification, can the Foreign Secretary assure the House that Her Majesty's Government will take the initiative in proposing a new Western approach to Russia on conditions less rigid than those maintained at the Berlin Conference?

Mr. Macmillan: We shall first discuss with all our friends, including our German friends. The meetings of the expert advisers start today, and we shall have the opportunity in Paris of further intimate discussions with all the Ministers concerned. I think the best contribution that I can make is in concert with them to see what is the best approach.

Mr. Warbey: As imaginative and conciliatory gestures are now coming from Washington, Peking and Moscow, cannot we have something from London as well? Will not the Government now make a new proposal which would take Germany right out of the strategic conflict between East and West?

Mr. Macmillan: I think it would be very unwise of me to make a new proposal without consultation with our German friends.

Sir L. Ungoed-Thomas: Is it not correct that, once sovereignty is granted, there is nothing to prevent Western Germany from having unilateral negotiations with Russia for reunification?

Mr. Macmillan: There is no legal objection to the Western German Government acting unilaterally, but I have no doubt that they will act with us as allies in this matter after 5th May as they are doing now.

Oral Answers to Questions — MEMORIAL SERVICES, BAYEUX (PASSPORTS)

Mr. Edward Evans: asked the Secretary of State for Foreign Affairs whether he is aware that widows and other near relatives of men who lost their lives on the D-day landings in Normandy and subsequently have been invited to attend memorial services at Bayeux in June; that they are required to provide themselves with British passports; and whether, in view of the fact that this requirement causes expense and trouble, Her Majesty's Government will waive the demand for passports on exit from and return to this country for these people and make representations to the French authorities inviting them to do the same.

The Joint Under-Secretary of State for Foreign Affairs (Mr. R. H. Turton): I regret that Her Majesty's Government cannot agree that these widows and relatives should go to France without any valid travel documents. The organisations sponsoring this pilgrimage have been informed that those who do not possess ordinary passports may be issued with special War Graves passports of short duration for a reduced fee.

Mr. Evans: Is this not a most vexatious and nonsensical prohibition on widows to have to go through all the formalities of


getting passports signed when, at the same time, we are going to allow passport-free travel from some of the South Coast ports? Will not the Minister look into this matter again to see if these conditions can be alleviated for these poor people?

Mr. Turton: No, Sir. All persons travelling abroad are expected to have a valid travel document satisfactorily establishing identity and nationality. In fact, the special excursion arrangements recently announced by my right hon. and gallant Friend the Home Secretary include provision for a special identity document to be taken by such travellers.

Mr. Attlee: Would it not be possible on an occasion like this to grant free documents to these people?

Mr. Turton: Arrangements are being made in this case, as in cases of similar journeys sponsored by the British Legion, whereby the travel document is supplied for a very small charge—the charge is 7s. 6d.—and in these cases no formalities, such as the production of a birth certificate, are necessary.

Mr. Attlee: Seven and sixpence is quite a lot to a widow.

Mr. Evans: In view of the very unsatisfactory and disappointing answer, I propose to raise the matter on the Adjournment.

Oral Answers to Questions — BURGESS AND MACLEAN

Lieut-Colonel Lipton: asked the Secretary of State for Foreign Affairs what further investigations are being made into the disappearance of Burgess and Maclean; and what is the result of these investigations.

Mr. H. Macmillan: I cannot add anything to the reply given to the hon. and gallant Member by the Minister of State on 31st January last.

Lieut-Colonel Lipton: Will the Minister say for how much longer this solemn four-year-old farce of investigation will be continued? What, if anything, has been the result of his investigations to date? Will he abandon what looks like a foolish expenditure of time, money and effort?

Mr. Macmillan: I shall consider how to resolve that dilemma.

Mrs. Mann: Will the right hon. Gentleman consider the very simple expedient of asking the Russians if they know anything about Burgess and Maclean and telling them that if they would like any more like Burgess and Maclean they have just to ask us and we will send them over? [HON. MEMBERS: "Answer."] I want an answer. Has Russia been asked?

Oral Answers to Questions — BRITISH EMBASSY, TOKIO (BULLETIN)

Mrs. Castle: asked the Secretary of State for Foreign Affairs whether the attack on the Peking Government in the current issue of "British Opinion," published by the British Information Services in Tokio, was made with his approval.

Mr. Turton: I would refer the hon. Member to the reply given to the hon. Member for Broxtowe (Mr. Warbey) on 25th April.

Mrs. Castle: Is the hon. Gentleman aware that the reply given by his right hon. Friend rather regrettably seemed to condone this article, an article which was described by the diplomatic correspondent of the "Manchester Guardian" as a slashing attack on the Chinese Government? That correspondent also described it as hardly calculated to have a useful effect on the peoples of South-East Asia, or indeed anywhere else. Can we have a repudiation of that policy by the Government?

Mr. Turton: If the hon. Lady reads my right hon. Friend's reply, she will see that he put this article in its proper perspective.

Mrs. Castle: On the contrary, is the hon. Gentleman aware that his right hon. Friend went out of his way to say that he thought that the article was very small beer? Does he not realise it has caused a good deal of uneasiness in South-East Asia, where we are trying to win support for our view that we stand for peaceful coexistence?

Mr. Turton: I refer the hon. Lady to the reply given by my right hon. Friend, which in fact she has quoted quite incorrectly.

Oral Answers to Questions — MALAYA AND SINGAPORE (CHINESE NATIONALS)

Mr. Sorensen: asked the Secretary of State for Foreign Affairs what action Her Majesty's Government are taking with particular reference to the Federation of Malaya and Singapore to secure an agreement by which Chinese dual nationality no longer affects those two territories.

Mr. Turton: It is reported that the Governments of Indonesia and of the People's Republic of China signed such an agreement in Bandung on 22nd April. When this agreement is published it will be studied by Her Majesty's Government to see if there is any action we can usefully take.

Mr. Sorensen: Can we have an assurance that Her Majesty's Government will try to secure the same essential agreement as that which is apparently about to operate between Indonesia and China?

Mr. Turton: The hon. Gentleman will remember that when he asked me a rather similar question in January I then pointed out that Her Majesty's Government had noted the Chinese official statement that it was the duty of Chinese communities overseas not to take part in political disputes in their countries of residence and to obey and observe local laws and customs. So long as that is carried out, the position will be entirely satisfactory.

Mr. Sorensen: Is not this new agreement far more cogent than the general agreement given on that occasion?

Mr. Turton: Let us first see the agreement.

Oral Answers to Questions — FORMOSA (SITUATION)

Mr. D. Healcy: asked the Secretary of State for Foreign Affairs what new commitments Her Majesty's Government have accepted concerning the defence of Formosa.

Mr. H. Macmillan: Her Majesty's Government have no commitment, other than such general obligation as might arise from their membership of the United Nations. Meanwhile the House will be aware that our policy has always been to try to get a cease-fire and to see

the problems of Formosa and of the offshore islands settled by negotiation. We have been in continuous communication with the parties concerned in order to obtain these objectives. If we may judge from recent events, our efforts have not been without success. Her Majesty's Charge d'Affaires at Peking has been instructed to discuss the situation with Mr. Chou En-Lai and to ask him to elaborate still further the ideas which prompted his statement in Bandung. I am not without hopes that the whole situation in the Far East may begin to develop along more favourable lines.

Mr. Healey: While sharing the Foreign Secretary's hope, in view of the overwhelming opposition among British people to any support for the Kuomintang authorities on Formosa, can he confirm or deny unanimous reports in the American Press that the Government are considering in certain circumstances joining America in the defence of Formosa but are frightened to say so now during the election campaign?

Mr. Macmillan: That statement is rather unworthy of the hon. Gentleman. We have made no such commitment, and I have answered the question exactly as it was put to me. We are, however, using our endeavours—and I thought that it was the wish of all Members of the House—to try to bring about a conciliatory solution of this problem.

Mr. Shinwell: Did not the right hon. Gentleman say the other day, in reply to a supplementary question I put to him about the offer of the Chinese Foreign Minister to negotiate with the Americans about Formosa and the Far East generally, that the Chinese Nationalist Government must be brought in? Is that not what he said? In view of Mr. Dulles's reversal of policy in this respect, what is now the policy of Her Majesty's Government?

Mr. Macmillan: It is difficult to imagine a solution—I have my words here:
…Without all the parties concerned having some part in it and their interests taken care of."—[OFFICIAL REPORT, 25th April, 1955: Vol. 540, c. 617.]

Mr. Shinwell: That is perfectly true. The right hon. Gentleman quotes correctly from the OFFICIAL REPORT.
However, the position seems to have changed because of Mr. Dulles's declaration. What is now the view of the Government?

Mr. Macmillan: The most important thing the Government can do is to continue, as we have been doing, to keep in touch with both sides and to bring to bear what influence we can so that this matter can be settled without recourse to force by negotiations and good will.

Viscount Hinchingbrooke: Is my right hon. Friend aware that there can scarcely have been any time in the last 30 years when the influence of Her Majesty's Government was more supreme in the councils of the world than now?

Oral Answers to Questions — SUDAN (ANGLO-EGYPTIAN AGREEMENT)

Mr. A. Henderson: asked the Secretary of State for Foreign Affairs whether he will give an assurance that it remains the policy of Her Majesty's Government in the United Kingdom to implement all the provisions of the 1953 Agreement with the Egyptian Government concerning self-government and self-determination for the Sudan.

Mr. H. Macmillan: Yes, Sir.

Mr. Henderson: May I ask the Foreign Secretary whether this reply would continue to operate in the event of the Sudanese establishing an independent sovereign republic?

Mr. Macmillan: The policy of the Government is to adhere to the agreement into which we have entered. Any change in the relevant provisions of the Anglo-Egyptian Agreement on the Sudan would, I think, require a formal approach to the co-domini.

Oral Answers to Questions — GIBRALTAR

Port Development Project

Mr. Dodds: asked the Secretary of State for the Colonies if he can yet make a statement in respect of the proposals for developing the port of Gibraltar.

The Secretary of State for the Colonies (Mr. Alan Lennox-Boyd): The Governor, after considering the report of the consulting engineers, has informed me that

he wishes to proceed with a port development project and has asked that a number of aspects of the project, including the question of finance, should be considered. These are now under examination.

Mr. Dodds: Does the right hon. Gentleman appreciate that the statement he has just made will be received with considerable pleasure in Gibraltar? Will he also state whether he has been able to make any progress with the Admiralty in respect of giving up part of their oil tankerage for commercial purposes?

Mr. Lennox-Boyd: I am grateful for the hon. Gentleman's words and share the view he has expressed. The Admiralty told me that it has been recently considering, in conjunction with the various interests concerned, whether and in what way it can best help, and I hope that a decision will soon be reached.

Tourist Industry

Mr. Dodds: asked the Secretary of State for the Colonies what further discussions have taken place or are contemplated with representatives of tourist agencies and shipping companies in this country designed to develop Gibraltar's tourist industry; and what action is contemplated to increase hotel accommodation for visitors.

Mr. Lennox-Boyd: My right hon. Friend the Minister of State for Colonial Affairs has arranged a meeting next week with representatives of some of the shipping companies and tourist agencies. In reply to the second part of the Question, the Gibraltar Government are doing all they can to encourage people who are or might be interested in the business of providing more hotel accommodation in Gibraltar.

Mr. Dodds: Is the Colonial Secretary aware that that, too, will be received with pleasure in Gibraltar? I should like to add my personal congratulations to the Minister of State for the initiative he has taken in this way.

Mr. Lennox-Boyd: I thank the hon. Member very much.

Secretary of State's Visit

Mr. Dodds: asked the Secretary of State for the Colonies if he will now state when he proposes to visit Gibraltar.

Mr. Lennox-Boyd: The most precise information I can give the hon. Gentleman is that the date will be some time after 26th May.

Mr. Dodds: Does the right hon. Gentleman think that he can do a very much better job in Gibraltar in May than he will be able to do defending the Budget in this country?

Mr. Lennox-Boyd: I hope to go there shortly after 26th May with popular support.

Oral Answers to Questions — CYPRUS

Disturbances

Mr. Benn: asked the Secretary of State for the Colonies if he will make a statement on the recent disturbances in Cyprus.

Major Wall: asked the Secretary of State for the Colonies what measures are being taken to combat terrorism in the island of Cyprus.

Mr. G. Jeger: asked the Secretary of State for the Colonies whether he will make a further statement on the acts of violence against British troops in Cyprus.

Mr. Lennox-Boyd: Since my reply to Questions by my hon. Friend the Member for Colchester (Mr. Alport) and other hon. Members on 6th April, there have been four attacks on private residences of British Army officers, causing negligible damage and no injury to persons. There has been no further incidence since 9th April. I referred in my reply on 6th April to counter-measures by the Cyprus Government. These have been intensified. Combined military and police patrols have been increased; the number of special constables now exceeds 460 and steps have been taken to improve the security of vulnerable points.

Mr. Benn: Would the right hon. Gentleman not agree that it is the unfailing experience of history that people denied the prospect of freedom will turn to violence? Would the right hon. Gentleman not also agree that we cannot treat a nationalist movement as if it were a sort of crime wave?

Mr. Lennox-Boyd: This is one of those responsibilities from which Her Majesty's Government are not, like other people, in a position to try to opt out.

Major Wall: Does my right hon. Friend not agree that it is of the utmost importance to preserve the present good relations between the British community and the Greek and Turkish Cypriots on the island, and that therefore it is essential that the terrorists should be caught and punished, as their actions react on all the communities?

Mr. Lennox-Boyd: I am satisfied that the vast majority of the people in Cyprus deplore this recourse to violence.

Mr. Jeger: Does the right hon Gentleman recall that when he made his statement on 6th April he appealed to the Archbishop and other interested parties to deplore and issue statements condemning acts of violence? Has the right hon. Gentleman received information to the effect that they have in fact done so, and, if they have not, is there not really a heavy burden of responsibility on these people who have encouraged this Enosis movement to resort to violence against British troops?

Mr. Lennox-Boyd: Yes, I think it is a fair comment to make that the Archbishop and others in the Ethnarchy might well express their abhorrence of what has been going on.

Constitution

Mr. Benn: asked the Secretary of State for the Colonies what progress has been made in the discussions on constitutional development in Cyprus.

Mr. Lennox-Boyd: I am not yet in a position to add to my replies to Questions by the hon. Member for Holborn and St. Pancras, South (Mrs. L. Jeger) on 2nd March.

Mr. Benn: Has the right hon. Gentleman no news whatever to give the House of the progress of these talks, without which it is impossible to look forward to a peaceful future in Cyprus?

Mr. Lennox-Boyd: Any influence that the hon. Gentleman can bring to bear on the people so that they will take part in these talks will be very greatly welcomed.

Port Development Schemes

Major Wall: asked the Secretary of State for the Colonies what port development schemes are planned for the harbours of Cyprus.

Mr. Lennox-Boyd: In a report to the Governor, Sir Eric Millbourn, Ports Adviser to the Minister of Transport and Civil Aviation, has recommended the construction of three new deep-water berths at Famagusta and three more at Limasol and minor improvements at Paphos. As he also recommended, a detailed engineering survey will shortly be carried out to confirm the engineering practicability of the proposals and to obtain accurate estimates of their cost. A copy of the report has been placed in the Library, and I am sending one to my hon. and gallant Friend.

Major Wall: While thanking my right hon. Friend for that reply, and while welcoming the report, may I ask him also to bear in mind the claims of the port of Larnaca? This port is not selected for modernisation, and the town and district of Larnaca depend very much on modern facilities at that port.

Mr. Lennox-Boyd: I am aware of that fact. Of course, the report has been drawn up dealing with development in relation to the likely flow of trade through various ports, and that is the major consideration.

Mrs. L. Jeger: Is the right hon. Gentleman aware that some of these proposals for port improvements have been hanging about for a very long time? Will he try to see that some real action is taken in Cyprus without any unnecessary delay?

Mr. Lennox-Boyd: I am all in favour of concentration in Cyprus on the things that really matter, and I hope the hon. Lady will help in that task.

Mr. Teeling: Will my right hon. Friend bear in mind that the development likely to take place in Famagusta may well do considerable damage to the archaeological aspects of that town, which could attract a large number of tourists? Will my right hon. Friend consider that it may well be possible that Larnaka could take the place of Famagusta for much of this development?

Mr. Lennox-Boyd: In this, as in all things, I shall do my best to reconcile the old world and the new.

Oral Answers to Questions — KENYA

Civil Servants (Land Ownership)

Mr. Benn: asked the Secretary of State for the Colonies whether he will now ask for a return of the number of civil servants in Kenya to whom the Governor-in-Council has given permission to own land; and whether he will publish the information.

Mr. Lennox-Boyd: The Governor has furnished me with a return, which I am circulating in the OFFICIAL REPORT.

Mr. Benn: May I thank the right hon. Gentleman very much for his change of mind in this matter, in that he will recall that a month ago he said that he was unable to publish this figure, which will now be seen with very great interest by hon. Members on both sides of the House?

Mr. Lennox-Boyd: Ministers find frequently that they have to make up their minds on the value of the information if published and the amount of work its preparation would involve a heavily overburdened Government. I was prepared to look into this, and I shall now be interested to hear the comments of hon. Members.

Mr. Alport: Could my right hon. Friend give the figures and statistics pertaining to African civil servants?

Mr. Lennox-Boyd: No, Sir, because the majority of African civil servants own land in the native reserve according to tribal law and custom, and formal permission in that case is not necessary.

The following is the return:

Records before 1939 have been destroyed. Since 1939 civil servants have been given permission to acquire land as follows:—


(a) farm property





Europeans
…
…
94


Asians
…
…
3


Africans
…
…
Nil


(b) residential plots





Europeans
…
…
187


Asians
…
…
121


Africans
…
…
1

A plot of 20 acres or over is deemed to be farm property, although some of the smaller plots are used only for residential purposes. A residential plot is under 20 acres. The majority of African civil servants own land in the native reserve according to tribal law and custom. Formal permission is not required for such ownership.

Death Sentences

Mr. Brockway: asked the Secretary of State for the Colonies the number of Africans sentenced to death in Kenya during each month from the beginning of the emergency, and on what charges; and in how many cases in each category executions have followed or reprieves been declined.

Mr. Lennox-Boyd: From the beginning of the emergency to 15th April, 1955, 1,297 persons were sentenced to death in Kenya of whom 886 were executed. I am asking the Governor for month-by-month figures of persons sentenced to death and will arrange for them to be sent to the hon. Member.

Mr. Brockway: While we all understand the abhorrence and anger caused by Mau Mau atrocities, may I ask the right hon. Gentleman whether he does not think it desirable to keep our own record clean in this matter? Is it not the case that we have hanged over 500 Africans for crimes less than murder? Will he now bring in a modification which he has frequently indicated in reply to my Questions in the House?

Mr. Lennox-Boyd: As I told the hon. Gentleman, this question is under constant review. I have answered the Question on the Order Paper, and nothing more at this stage arises from it.

Sir T. Moore: Could my right hon. Friend at the same time publish the number of mutilations as well as murders that have been committed by these Africans and their fellows throughout the same period?

Mr. Lennox-Boyd: I have from time to time drawn attention to those ghastly facts, but I would hesitate to try to draw any mathematical comparisons in the field of justice.

Kikuyu Home Guard (Supreme Court Judgment)

Mr. Brockway: asked the Secretary of State for the Colonies what action Her Majesty's Government propose to take arising from the judgment of Mr. Justice Cram in the Supreme Court of Kenya that the Kikuyu Home Guard is illegal and that it is very doubtful whether its members have the right to carry firearms; and if he will place a verbatim report of this judgment in the Library of the House of Commons.

Mr. Lennox-Boyd: Following the doubts expressed by Mr. Justice Cram, the Kenya Government have examined the legal position of the Kikuyu Guard. Their view still is that its members were appointed as special tribal police and had the powers and rights conferred by the Tribal Police Ordinance and certain Emergency Regulations. The right to carry arms is specifically accorded by Section 8A of the Tribal Police Ordinance.
In any case, the status of the Guard is now beyond doubt since its reorganisation into regular tribal police, a new tribal police reserve and village watch and ward units is now almost complete. Any doubts about the former position of the Guard could, of course, only finally be resolved in the courts. A verbatim copy of the judgment, except that part delivered in camera, is in the Library.

Mr. Brockway: Could the right hon. Gentleman say how it is that a certain part of this judgment was delivered in camera? Are not Members of Parliament entitled to be aware of the whole of the judgment made in the Supreme Court in Kenya?

Mr. Lennox-Boyd: There was, so far as I know, what is virtually an unprecedented situation, in that a copy of the judgment given in camera was obtained by some unknown means and published in the Press without authority, as I think many hon. Members know. I feel that this is a matter affecting the judiciary in Kenya, and I am not prepared by publication to give even tacit approval to such a gross breach of the proprieties.

Administration of Native Courts (Report)

Mr. Brockway: asked the Secretary of State for the Colonies if the Report of the Committee of Inquiry into the Administration of Native Courts in Kenya has yet been presented to the Kenya Government.

Mr. Lennox-Boyd: Yes, Sir. It is now under consideration by the Kenya Government.

Mr. Brockway: Will the right hon. Gentleman urge the introduction of serious reforms in this matter in view of the very grave charges that were made in the judgment of Mr. Justice Cram? Will


he not now reconsider whether it is desirable that there should be an inquiry into the whole administration of justice in Kenya?

Mr. Lennox-Boyd: No, Sir. I do not think that is necessary at all. The question of the publication of the Report of the inquiry is now under consideration between the Kenya Government and myself, and I hope the hon. Gentleman will wait a little while, when I hope to make a further statement.

Displaced Kikuyu

Mr. Manuel: asked the Secretary of State for the Colonies under what authority 600,000 Kikuyu have been moved from their homes in Kenya; and what compensation was paid for the destruction of their 150,000 huts.

Mr. Lennox-Boyd: The concentration of Kikuyu into villages has been effected by administrative direction through the authority of tribal chiefs and headmen. Most of the people moved voluntarily and, although powers of compulsory removal exist in Emergency Regulations, these have rarely been used. In most cases only short distances are involved and the people concerned continue to farm the same land. Most of the material used in village construction has been salvaged from the old huts and further materials are provided free of charge by Government. The question of compensation does not therefore arise.

Mr. Manuel: Is the Secretary of State aware that what he says is not quite correct? One cannot salvage from a destroyed home when the home is destroyed by fire. He admitted in reply to a Question last week that many of the huts were being destroyed by fire. Can I have an assurance that when huts are destroyed by fire he will provide a suitable replacement for them, as they often represent the total wealth of the native occupier?

Mr. Lennox-Boyd: No, Sir. As I have said, most of this work is being carried out with full agreement. If the hon. Gentleman has a chance to visit some of the new villages in Kenya, he will find that not only from the point of view of combating terrorism, but, equally important, from the point of view of a good life in the future and the education and health

of the people concerned, the villages provided for the Kikuyu, the Embu and the Meru constitute one of the most hopeful signs for the future.

Mr. Alport: Is my right hon. Friend aware that the revolution which is taking place through the increase in villagisation of the Kikuyu is one of the most important social developments in Africa at the present time? Will he make it clear that no Question such as that asked by the Opposition indicates that we in this House—at least, those who are aware of African conditions—are opposed to the speedy carrying out and prolongation of the revolution?

Mr. Lennox-Boyd: I am sure that is so.

Land Holdings (Confiscation Orders)

Mr. Manuel: asked the Secretary of State for the Colonies how many persons in Kenya have been the subject of orders confiscating the whole or part of their land holdings since the beginning of the emergency; what compensation was given; and what opportunities the owners were given to object to the orders by representation in any court by counsel.

Mr. Lennox-Boyd: I am asking the Governor of Kenya for the information requested by the hon. Member and will write to him when it is received.

Nyeri District Commissioner (Posting)

Mr. Rankin: asked the Secretary of State for the Colonies if Mr. Hughes still holds the post of District Commissioner of Nyeri in view of the fact that he admitted in evidence that he had directed headmen that they might imprison Africans at discretion, a course described by Mr. Justice Cram in a judgment on 10th December, 1954, as repugnant to British justice and morality.

Mr. Lennox-Boyd: No, Sir. Having completed a tour of duty in the emergency areas, he was posted as District Commissioner, Mombasa, in January.

Mr. Rankin: Is the Minister satisfied that this District Commissioner is now in a place where any views that he may have will not create the trouble that they might have created in the place where he was recently situated?

Mr. Lennox-Boyd: If the hon. Gentleman had, as I have had, the pleasure of the friendship of the officer concerned, he would not make a remark of that kind. The work that is done in Kenya must often be judged against the exigencies of the period. I know the outstanding work that Mr. Hughes has done for the Kikuyu people, and I am sure that other hon. Members who have been there also know it.

Mr. Rankin: Nevertheless, will not the Minister agree that District Commissioners, to whose work we generally pay a great tribute, ought to be very careful about the views which they express in these difficult areas?

Mr. Osborne: What about hon. Members?

Mr. Lennox-Boyd: I think that prudence in speech is desirable both in Kenya and in England.

Mr. Rankin: What about Scotland?

Screening Camps and Interrogation Centres (Report)

Mr. Rankin: asked the Secretary of State for the Colonies if he will place in the Library of the House of Commons a copy of the report by Sir Vincent Glenday on the general administration of screening camps and interrogation centres.

Mr. Lennox-Boyd: Sir Vincent Glenday's report has been received by the Kenya Government and is now being studied. The question of publication is being considered.

Mr. Rankin: In view of the fact that the right hon. Gentleman approved of the appointment of Sir Vincent. will he use his influence to see that the report is made available in the Library of the House?

Mr. Lennox-Boyd: I am always anxious to keep hon. Members informed about the progress of events, but the Governor informed me a few days ago that the main report had been received; clearly, before it is studied and I have consultations with him, I cannot give a firm answer about publication.

Oral Answers to Questions — COLONIAL TERRITORIES

Leprosy

Mr. Awbery: asked the Secretary of State for the Colonies if, in order to make adequate provision for assisting lepers, he will arrange for a census to be taken in all our Colonies of people suffering from this disease, of the number of hospitals treating them, and of the present supplies of the latest drugs, as a preliminary to taking further action to assist these sufferers.

Mr. Lennox-Boyd: Action to combat leprosy as well as other diseases is the responsibility of Colonial Governments, all of which have taken steps to assess the size of the problem in their own territories and to provide facilities for treatment to the limit of the resources at their disposal. I am always ready to afford them such aid and advice as I can, but I do not think that a census of the kind proposed is needed or would help the work forward. Fully adequate supplies of all modern drugs are available for the territories concerned.

Mr. Awbery: While we fully appreciate what has been done in the past for these unfortunate people, is the Minister aware that there is still much more to be done? Thousands of sufferers are walking around in the towns of our Colonies. Is not the first step in getting rid of the disease the taking of a census? Will the right hon. Gentleman refer the matter to the United Nations organisations for them to use their powers in helping not only this country but colonial countries?

Mr. Lennox-Boyd: No, Sir. This is a matter involving very acute personal feelings. We are very anxious that patients should come forward voluntarily for treatment, and a census at this stage might well have a very adverse effect. There is no reason whatever why people suffering from the disease should be walking about the streets in any of our Colonies not knowing where they can go for treatment.

Annual Reports (Publication)

Mr. Beresford Craddock: asked the Secretary of State for the Colonies whether he will take steps to expedite the publication of the annual reports of Colonial Territories.

Mr. Lennox-Boyd: Yes, Sir. I shall continue to take every opportunity to urge on Colonial Governments the importance of the earliest possible publication of these reports.

Mr. Craddock: While I thank my right hon. Friend for that assurance, is it not a fact that some territories have already reported for last year, while there are still some which have not issued their reports for 1953? Can he say whether there is any particular reason why that disparity should exist?

Mr. Lennox-Boyd: There is a desperate shortage of staff. While it is of great importance to get the reports prepared, in some Colonies other work is given higher priority. However, I am conscious of the need to press on with the work.

Mr. J. Johnson: Is it not a fact that some Colonies, like Uganda, have first-class public relations officers, but others may not have quite such good ones?

Mr. Lennox-Boyd: Some Colonies, like Uganda, have first-class natural resources.

African Colonies (Juvenile Delinquency)

Mr. Sorensen: asked the Secretary of State for the Colonies to what extent there has been an increase or a decrease in the number of cases of juvenile delinquency in West African and East African Colonies, respectively, during 1954 or 1953 compared with 1950 or 1951; and what is the increase or decrease in the number of instances for the same periods where corporal punishment has been inflicted.

Mr. Lennox-Boyd: As the reply necessarily contains a number of figures, I will, with permission, circulate it in the OFFICIAL REPORT.

Mr. Sorensen: Can the right hon. Gentleman say whether the incidence of juvenile delinquency has gone up or gone down, and if it has gone up, what is the cause?

Mr. Lennox-Boyd: Not surprisingly it has gone up in some places and down in others. So I hesitate to give an answer.

Mr. Sorensen: Would the Minister give us a little more information on the subject and not try to ride off in that fashion?

Mr. Lennox-Boyd: The answer will be circulated in the OFFICIAL REPORT, and today week I shall be at the top of the list at Question Time, when the hon. Gentleman can apply whatever chastisement he chooses.

Following is the reply:


—
JUVENILE DELINQUENCY* Sentences by Magistrates and Juvenile Court Orders, including probation, etc.
CORPORAL PUNISHMENT of Juveniles (Sentences)



1951
1953
1951
1953


Tanganyika
Not available
Not available
424
452


Zanzibar
63
70
10
23


Kenya
1,333
1,137
646
924


Uganda
211
248
13
16


Nigeria
609
610
Not available
Not available


Gold Coast
655
856
159
105


Sierra Leone
180
353
0
0


Gambia
Not available
Not available
5
Not available


*The figures for juvenile delinquency necessarily reflect only sentences and orders of Magistrates' and juvenile courts. By far the greater number of juvenile offenders are dealt with by Native Courts and tribal authorities and no comparable statistics could be obtained. Increases under this head may reflect the expansion of the juvenile court system in the territories rather than an increase in juvenile delinquency. It is not therefore safe to base any conclusions about the extent of juvenile delinquency or the effects of corporal punishment on the figures available.

Oral Answers to Questions — MALAYA AND SINGAPORE

English Language (Use and Instruction)

Mr. Awbery: asked the Secretary of State for the Colonies if he is aware that the language expert of the United Nations Educational, Scientific and Cultural Organisation has urged a better system of teaching the English language in Malaya; and, in view of the fact that this is to be the language of the Legislature, whether he will provide greater facilities for the teaching of English as a second language and appoint men with experience in language work to superintend it.

Mr. Lennox-Boyd: The proposals of the U.N.E.S.C.O. language expert are at present under consideration in Malaya. If the hon. Member is referring in his question to the Federation of Malaya, he is in error in saying that English is to be the language of the Legislature. The Federation of Malaya Agreement states that Malay and English are the official languages of the Federation Legislative Council. English is the official language of the Singapore Legislative Assembly.

Mr. Awbery: Has it not been decided that English is to be the language used in the Legislature? When a Question was asked the other day as to whether there would be a multi-lingual system, the Minister said that he could not agree to it. Owing to the importance of the fact that English is to be the language used in the Legislature, surely we should press for schools and early training of the children to enable them to learn English?

Mr. Lennox-Boyd: I think the hon. Member has got Malaya and Singapore mixed up. If he will read my answer, he will learn what the correct position is.

Mr. Awbery: Is the right hon. Gentleman aware that when the Government of the Federation of Malaya are elected in two or three months' time they can themselves determine what language shall be used?

Mr. Lennox-Boyd: It has already been agreed that English and Malay are the official languages and are to be the official languages of the forthcoming Federation Council.

Commander Donaldson: Is my right hon. Friend aware that Canada is still a bi-lingual country and people seem to get along very well there?

Chinese Middle School (Students' Union)

Mr. Proctor: asked the Secretary of State for the Colonies if he will now permit the students of the Chinese Middle School in Singapore to form a students' union.

Mr. Lennox-Boyd: This is a matter for the Singapore Government, and I do not propose to intervene.

Ministerial Appointments

Sir R. Robinson: asked the Secretary of State for the Colonies what ministerial appointments have been made in Singapore following the recent elections.

Mr. Lennox-Boyd: As the reply consists of a list of offices and names, I will, with permission, circulate it in the OFFICIAL REPORT.

The following is the list:

Chief Minister and Minister for Commerce: Mr. D. Marshall (Labour Front).
Minister for Communications and Works: Mr. F. Thomas (Nominated).
Minister for Education: Mr. Chew Swee Kee (Labour Front).
Minister for Health: Mr. A. J. Braga (Labour Front).
Minister for Labour and Welfare: (Mr. Lim Yew Hock (Labour Front).
Minister for Local Government, Lands and Housing: Enche Abdul Hamid bin Haji Jumat (U.M.N.O./M.C.A. Alliance).
Assistant Minister in the Ministry of Commerce: Mr. J. M. Jumabhoy (Labour Front).

Election Results

Sir R. Robinson: asked the Secretary of State for the Colonies the number of seats held by each of the parties in the recent elections in Singapore; and what was the percentage of votes polled by each of these parties.

Mr. Lennox-Boyd: The Labour Front won 10 seats with 26·7 per cent. of the votes polled; the Progressive Party, four seats with 24·5 per cent. of the votes; the Democratic Party two seats with 20·3 per cent. of the votes; Independents three seats with 96 per cent. of the votes; the People's Action Party three seats with 8·6 per cent. of the votes; and the U.M.N.O./M.CA. Alliance three seats with 8·3 per cent. of the votes. The Labour Party polled 0·8 per cent. of the votes but won no seats.

Sir R. Robinson: Can my right hon. Friend say whether the resultant Government is a minority Government or a coalition Government?

Mr. Lennox-Boyd: It is a coalition Government, but I would not suggest that hon. Members opposite by changing their name from "party" to "front" are likely to fare any better in a month's time.

Mr. J. Johnson: Is it not a fact that the term "Labour Party" is something


of a euphemism in Singapore and does not compare with the term as understood here?

Mr. Lennox-Boyd: I think the word "Labour" applied to the Labour Party is also a euphemism in the United Kingdom.

University of Malaya, Kuala Lumpur (Building Plans)

Mr. Sorensen: asked the Secretary of State for the Colonies why collegiate residences have been given priority compared with the need for buildings for the engineering and agricultural faculties in the plans of the University of Malaya at Kuala Lumpur.

Mr. Lennox-Boyd: This is a question for the authorities of the University, which is in such matters an autonomous institution.

Mr. Sorensen: Would the Secretary of State do something to recommend that the expenditure be devoted to more necessary purposes?

Mr. Lennox-Boyd: We are all the time anxious to encourage self-reliance and independence among the people for whom we have responsibility, and I would hesitate to do work which is properly theirs.

Transport Industry (Report)

Mr. G. Longden: asked the Secretary of State for the Colonies whether the recommendations of a Select Committee of the Federal Legislature on the transport industry in Malaya have been accepted by the Government of the Federation.

Mr. Lennox-Boyd: These recommendations are to be considered by the Federal Legislative Council next month.

Mr. Longden: Would my right hon. Friend not agree that the progress of Malaya in these matters and in industry generally should not necessarily be held up while other communities catch up?

Mr. Lennox-Boyd: Yes, Sir, I am anxious to encourage Malayan participation in industry and I shall await the discussion with the greatest interest.

Oral Answers to Questions — TRINIDAD (JEHOVAH'S WITNESSES)

Lieut-Colonel Lipton: asked the Secretary of State for the Colonies what breaches of public order and security have been committed in Trinidad during the past year by missionaries of the organisation known as Jehovah's Witnesses.

Mr. Lennox-Boyd: None, Sir.

Lieut.-Colonel Lipton: If there is no evidence that the activities of these people have proved detrimental to public order and security, why do the Government of Trinidad forbid them to stay temporarily in Trinidad? Are they not people who have been doing vital work in the Caribbean Islands for the past six years?

Mr. Lennox-Boyd: I think there has been a great deal of misunderstanding about the matter. The Government of Trinidad have the prime responsibility for the preservation of law and order in the territory. No one claims that the teachings of the movement are always detrimental to public order, but they may be. The line that I have taken in the matter is exactly the same as that taken by the right hon. Member for Llanelly (Mr. J. Griffiths) when Colonial Secretary, the right hon. Member for West Bromwich (Mr. Dugdale) when Minister of State, and my noble Friend Lord Chandos. Any body which, in the opinion of the Government, may tend to weaken respect for law and encourage non-co-operation must clearly be watched by the Government of the Colony.

Mr. Rankin: Is the Minister aware that most of the people are pacifists and conscientious objectors? Is that why the Government are afraid of them?

Mr. Lennox-Boyd: Conscientious objection to paying taxes may well be very inconvenient for many Governments.

Dr. King: Since the last thing that this small religious sect would be concerned with is the violent overthrow of government, does not the Minister think that he is letting down the whole of the British way of life in persecuting it?

Mr. Lennox-Boyd: No, Sir. Governments can be undermined not only by force but also by refusal to take any notice of their orders. I think it is fair to say


that 11 full-time leaders of the movement in Trinidad are, in the opinion of the Government, regarded as adequate.

Oral Answers to Questions — BAHAMAS (FOREST FIRES)

Mr. Russell: asked the Secretary of State for the Colonies how many acres of land were affected by the recent bush fires in the Bahamas; what damage was done to timber, agricultural land or buildings; how many days it took to bring these fires under control; and whether he is satisfied that adequate precautions will be taken to prevent or control such fires in the future.

Mr. Lennox-Boyd: The forest fires in question affected 7–8,000 acres in scattered and largely uninhabited areas and burned for nine days. The chief damage was to the natural regeneration. Grown timber will survive and there was no damage to agricultural land or buildings. Such measures of control as were feasible in the circumstances were taken. The Bahamas Government is doing what it can to improve control measures, but there, as elsewhere, the prevention of fires can only be achieved by the cooperation of an enlightened public.

Oral Answers to Questions — BUGANDA (CONSTITUTION)

Mr. Beresford Craddock: asked the Secretary of State for the Colonies the present position with regard to the Constitution of Buganda.

Mr. Lennox-Boyd: The committee appointed by the Lukiko to examine the recommendations made by the conference presided over by Sir Keith Hancock has now presented its report. It will be discussed by the Lukiko on 9th May.

Oral Answers to Questions — UGANDA (AFRICAN GINNERIES)

Mr. Beresford Craddock: asked the Secretary of State for the Colonies how many ginneries are being operated by Africans during the present cotton season in Uganda.

Mr. Lennox-Boyd: Nine, Sir.

Oral Answers to Questions — ZANZIBAR (CLOVE INDUSTRY)

Sir R. Robinson: asked the Secretary of State for the Colonies what progress has been made in rehabilitating the clove industry in Zanzibar after its serious losses from disease; whether the possibility of establishing alternative crops for export has been examined; and with what results.

Mr. Lennox-Boyd: Last year's clove crop was the second largest on record. Field experiments and demonstrations are consolidating knowledge gained from research into clove diseases. Apart from the coconut industry, which is already well developed, chillies, derris, cocoa and citrus are among the alternative crops which the Zanzibar Government are trying to develop; slow but steady results are being obtained.

Sir R. Robinson: Do I understand from my right hon. Friend's answer that the Government in Zanzibar have now conquered this disease, and, if the answer is in the affirmative, may we hope that others will follow this example and eradicate this disease which is known as "sudden death."

Mr. Lennox-Boyd: I would not say they have conquered it, but I think they have considerably improved the situation.

Mr. Snow: Is it not a fact that over 90 per cent. of the clove trade export from Zanzibar is used for a wholly illegal narcotic trade in the East?

Mr. Lennox-Boyd: No, Sir. I am perfectly certain that that is not so, and I hope the hon. Gentleman will put down a Question next week to enable me to put the facts right about a very important trade to a very important part of Her Majesty's Colonies.

Mr. J. Hynd: Can the Minister confirm or otherwise that it has been discovered that this disease was due to termites, which was the conclusion reached a few years ago?

Mr. Lennox-Boyd: "Sudden death" has been generally felt to be connected with a fungus disease, and experiments are continuing with good prospects.

Oral Answers to Questions — POST OFFICE (TELEGRAPH POLES)

Mr. Crouch: asked the Postmaster-General the cost of steel and wood telegraph poles, respectively; and what was the number of each used in 1954.

The Postmaster-General (Dr. Charles Hill): We have not bought any steel poles since 1949; they then cost from two to three times as much as wooden poles, depending on size. Last year we used 6,300 of our remaining stock of steel poles, and 127,800 wooden poles.

Mr. Crouch: In view of the fact that steel poles are not being bought today, why have they been taken out and replaced by wooden ones and considered to be of so little value that they are left at the farm or on the land from which they have been removed?

Dr. Hill: The replacement of steel poles by timber poles is taking place as and when necessary, but if my hon. Friend has details of local problems perhaps he will let me know.

Oral Answers to Questions — TELEPHONE SERVICE

Litherland

Mr. Page: asked the Postmaster-General how many applicants are awaiting the installation of telephones in the area of the Litherland Urban District Council, Lancashire; what is the comparable figure for a year ago; and what steps are being taken to shorten the waiting time.

Dr. Hill: Figures for the Litherland Urban District are not available, but in the Waterloo exchange area, which includes nearly all the urban district, there are 248 applications outstanding, of which 72 are in course of being met or are under inquiry. The figure a year ago was 222. We supplied 400 telephones in 1954 and plan to increase this to 500 in the current year.

Vicar of Burntwood

Mr. Snow: asked the Postmaster-General if he will reconsider his decision not to allow the Reverend C. C. D. Lewis, Vicar of Burntwood, a private telephone line not only in view of his normal parochial work, but also in view of his

confidential responsibilities as Chaplain to St. Matthew's Mental Hospital.

Dr. Hill: I am afraid that the decision must be maintained. We have avoided asking the Vicar of Burntwood to share for as long as we could, but it is now the only way in which we can give telephone service to an applicant in the neighbourhood.

Mr. Snow: Is not the decision rather lacking in imagination and does not the right hon. Gentleman's own experience as a doctor tell him that there are cases which arise where it is essential that there should be complete confidence as between the staff, the patients and the incumbent in question?

Dr. Hill: I have a great deal of sympathy with Mr. Lewis, and I have gone into this matter carefully in the hope of finding another way of dealing with the problem. There is a subscriber in the area, the Burntwood Primary School, which is not compelled to share. I have endeavoured to persuade them to share. If the hon. Gentleman will join me in endeavouring so to persuade them, we may solve the problem without requiring Mr. Lewis to share.

Mr. Snow: Passing the buck.

Enfield Exchange

Mr. Ernest Davies: asked the Postmaster-General when work will begin on the Enfield automatic telephone exchange; and when completion is anticipated.

Dr. Hill: The new building is expected to start at the end of 1956 and the automatic telephone exchange should be ready for service towards the end of 1960.

Mr. Davies: Is not it possible for work to start earlier than that, especially as about two years ago a promise was given by the Department that work would start earlier?

Dr. Hill: The hon. Gentleman will realise that this year and in the next two years it is proposed to create new and extended exchanges to the number of about 370, in addition to the 60 large exchanges which are being converted to automatic use. This proposal needs to be fitted in with the general plan.

Oral Answers to Questions — TELEVISION LICENCES

Mr. Crouch: asked the Postmaster-General the number of licensed television sets in the United Kingdom on 1st October, 1951; and the number at the last convenient date.

Dr. Hill: There were 958,333 television licences in force on 1st October, 1951, and 4,503,766 on 31st March, 1955.

Mr. Crouch: Does not this reflect upon the very high earnings and wages of people in this country?

Dr. Hill: The figures speak for themselves.

Mr. Emrys Hughes: Would the Minister not agree that television sets are too dear, that a good many of the component parts are under the control of monopoly, and does he not think it is time that the Government removed their Hire-Purchase Order which makes it impossible for low wage earners to buy sets?

Dr. Hill: I am asked in this Question about the number of licences for television sets, and I have given the figures, which show a most extraordinary growth.

Mr. Fernyhough: Would not the Minister agree that it was obvious to anyone that the stations which were being erected in 1951 were not able to provide a television service in the North and that therefore there was no need for the people to buy a licence but that as and when the stations started by the Labour Government were completed people were able to have sets?

Mr. Ness Edwards: Would the right hon. Gentleman not agree that the B.B.C. has done a very good job in making television available to so many people?

Dr. Hill: Of course, I agree.

Sir F. Medlicott: asked the Postmaster-General how many television licences were issued in the County of Norfolk, including the City of Norwich, during the years 1952, 1953 and 1954, and as at the latest convenient date.

Dr. Hill: One thousand eight hundred television licences were issued in the County of Norfolk in 1952, 3,700 in 1953, and 5,200 in 1954. The number current at the 31st March this year was 10,700.

Sir F. Medlicott: Do not these figues prove the need which existed for a special station in the County of Norfolk and show the gratifying response which has followed its installation?

Oral Answers to Questions — ROYAL AIR FORCE (AIRCRAFT MECHANICS)

Mr. N. Macpherson: asked the Under-Secretary of State for Air how many hourly-rated skilled aircraft mechanics are employed by his Department in the United Kingdom.

The Under-Secretary of State for Air (Mr. George Ward): None, Sir.

Mr. Macpherson: Surely there are a large number of hourly-rated skilled aircraft mechanics employed by my hon. Friend's Department? In his last reply to me when I asked a similar question on 23rd March, did not my hon. Friend cover these people?

Mr. Ward: No, Sir. All skilled engineering craftsmen employed by the Air Ministry as civilians are paid at weekly rates. There is no Air Ministry grade of aircraft mechanic.

Oral Answers to Questions — A77 TRUNK ROAD, MONKTON (SPEED LIMIT)

61 and 62. Mr. Ross: asked the Minister of Transport and Civil Aviation (1) if he will reconsider his decision to derestrict for speed-limit purposes that stretch of A77 at Monkton which adjoins the main runway of Prestwick Airport, in view of the dangers involved;
(2) why no specific reply was made to the detailed criticism by Ayr County Council of his proposal to derestrict a section of A77 near Prestwick Airport.

The Minister of Transport and Civil Aviation (Mr. John Boyd-Carpenter): This stretch of trunk road was automatically restricted last year, when street lighting was installed. In accordance with usual practice in such cases, in order to provide an opportunity for opinion to be expressed on the issue, I gave formal notice, by advertisement, of an intention to derestrict. I have now considered the matter and have decided that the restriction shall continue for the time being.

Mr. Ross: Is the Minister aware that his decision will give pleasure to those who have been very much enraged by what seemed to be his cavalier dismissal of the original suggestions made to him about the nonsensical nature of the first proposal?

Mr. Boyd-Carpenter: There has been no cavalier rejection of anything. It is normal practice, when restriction results automatically from the introduction of street lighting, to consider whether it should follow or whether the decision should be reversed.

Mr. Ross: Is the right hon. Gentleman aware that when the Ayr County Council gave a detailed reply to the original suggestion of his, it received no answer at all. In fact, all it received was the draft regulation.

Mr. Boyd-Carpenter: I am sure that there was no intentional discourtesy; perhaps the hon. Gentleman will take that from me.

Oral Answers to Questions — SHIPPING (REPATRIATED CREWS)

Mr. Awbery: asked the Minister of Transport and Civil Aviation in how many cases the repatriation of British delivery crews of colonial and foreign-purchased vessels has been undertaken by Government representatives abroad under the distressed seamen's arrangements during the past five years; and under what circumstances.

Mr. Boyd-Carpenter: Research into the records of distressed British seamen repatriated during the last five years has failed to reveal any case of the kind described by the hon. Member.

Mr. Awbery: Is the right hon. Gentleman aware that I have information that some shipowners are selling their ships, signing on a crew and sacking them when they have got to the port where the ship is being transferred? Will he look into any details which I send him?

Mr. Boyd-Carpenter: If the hon. Gentleman will be good enough to send particulars to me, of course I will inquire into them.

Oral Answers to Questions — CIVIL AVIATION

Renfrew Airport (Scottish Aviation Limited)

Mr. Rankin: asked the Minister of Transport and Civil Aviation the terms under which Scottish Aviation Limited are to assume tenancy of the engineering maintenance at Renfrew.

Mr. Boyd-Carpenter: The terms of tenancy are under discussion with the company today.

Mr. Rankin: Can the Minister assure us that, whatever steps he takes in handing part of this publicly-owned enterprise to private industry, he will ensure that at least it is done on an economic basis?

Mr. Boyd-Carpenter: Certainly. It is my intention to make a reasonable agreement, but while discussions are going on perhaps I had better not go into detail.

Aircraft Requirements (Aircrew)

Mr. Beswick: asked the Minister of Transport and Civil Aviation what consideration he has given to the developing policy of operators to reduce the number of crew members, though modern aircraft are faster, heavier, and more complex; and what directions or advice he has tendered to the Air Registration Board about the number of crew stations required in new aircraft.

Mr. Boyd-Carpenter: The minimum crews required for airworthiness and operational reasons are governed by the certificate of airworthiness and Air Navigation Regulations. These requirements are carefully watched. As regards the second part of the Question, the Air Registration Board are my expert advisers on airworthiness, and it would not be appropriate for me to give them directions or advice on this matter.

Mr. Beswick: Is not it a fact that there is a tendency to reduce the specialist crew members—the navigator and the radio operator are being eliminated and also, to some extent, so is the flight engineer—and is not this a case where the right hon. Gentleman might well go into the matter with the Air Registration Board to see if some formula could be laid down for the guidance of that body?

Mr. Boyd-Carpenter: Of course I go into each case when I get a recommendation from the Air Registration Board. I consider each matter on its merits. Certainly it would be quite wrong for me to give my expert advisers any instruction.

Mr. Beswick: But is the Minister aware that on the Air Registration Board there is no representative of the operating crews and that it is the opinion of operating crew members to which particular importance should be attached?

Mr. Boyd-Carpenter: I agree that the views of the operating crew members must be given due weight, but I have very high regard indeed for the advice that the Air Registration Board gives to me.

Air Safety Board

Mr. Beswick: asked the Minister of Transport and Civil Aviation how many times the Air Safety Board has met this year; what matters it has considered; and on what occasions it has considered the problems of crew fatigue, crew workload, and crew complement of aircraft, in so far as all these matters relate to air safety.

Mr. Boyd-Carpenter: The Air Safety Board is my adviser on safety matters, and it would be neither desirable nor in accordance with precedent for me to state details of its proceedings.

Mr. Beswick: Is not it a fact that there is good ground for looking into the composition of the Air Safety Board—both the personnel of the Board and the matters that come within its survey? Could not the Minister consider referring to it the problem of crew fatigue and the other matters mentioned in the Question?

Mr. Boyd-Carpenter: That is another question. I am always in touch with the Air Safety Board on these and other matters.

Air Commodore Harvey: Can we at least be told that the Air Safety Board is still alive?

Mr. Boyd-Carpenter: Yes, Sir.

Oral Answers to Questions — CANALS (CLOSURE ORDERS)

Mr. H. Fraser: asked the Minister of Transport and Civil Aviation the total canal mileage in Staffordshire; and how

much of this the British Transport Commission has recommended to him should be closed down.

Mr. Boyd-Carpenter: About 260 miles, of which some 26 miles are closed to navigation. The British Transport Commission Bill now before Parliament proposes to close a further eight miles. It has made no recommendation to me for any further closures.

Mr. H. Fraser: asked the Minister of Transport and Civil Aviation whether he will give an assurance that he will refrain from making any order closing a canal as a result of the recommendations of the British Transport Commission, until these recommendations have been debated by Parliament.

Mr. Boyd-Carpenter: No, Sir. Parliament has itself laid down a statutory procedure for the protection of all interests concerned in such a case, and I do not think it is for me to alter them.

Air Commodore Harvey: asked the Minister of Transport and Civil Aviation if he will reconsider his decision to close the Macclesfield Canal, in view of the amenities it offers to anglers and boating societies.

Mr. Boyd-Carpenter: I have made no such decision as my hon. and gallant Friend suggests.

Air Commodore Harvey: Will my right hon. Friend impress upon the British Transport Commission that it should look at this matter from an entirely different angle, because thousands of people derive pleasure from these canals, and can he say whether the Commission ever thought of selling licences on a national basis in a way similar to that operated in New Zealand? Will my right hon. Friend look into the matter to see if something can be done to enable these places to remain open on a commercial basis?

Mr. Boyd-Carpenter: All these points can be considered. All that has happened so far is that a board of survey has reported to the Transport Commission about the value of its canals for transport purposes.

Mr. Jack Jones: Does the Minister appreciate that there are documents in this House bearing 45,000 signatures of people from this area protesting against


the intentions of this body, and will he do something to see that the canals are kept open? This Government, like any other Government, want contented workpeople, and angling creates content.

Mr. Boyd-Carpenter: The only question that has arisen so far is that the Commission has been advised by the board of survey as to the value of its canals for transport purposes. No decision beyond that has been taken.

Oral Answers to Questions — TRANSPORT LEVY

Mr. Callaghan: asked the Minister of Transport and Civil Aviation the total of the levy paid to date under the Transport Act, 1953, to compensate for the loss on selling British Road Services vehicles.

Mr. Boyd-Carpenter: Up to the end of March, 1955,£7,677,000.

Mr. Callaghan: In view of the fact that this is a burden on industry and that the Minister cannot sell the lorries, does not he think it time that he called it a day and relieved industry of this ridiculous burden?

Mr. Boyd-Carpenter: I would refer the hon. Gentleman to the answers I have given him to similar supplementary questions on several occasions.

Mr. Renton: Is it not a fact that, contrary to the suggestions so often made by the hon. Member for Cardiff, South-East (Mr. Callaghan), there will be no loss on the sale of British Road Service vehicles on account of the fact that the levy will be paid and will cover it?

Mr. Boyd-Carpenter: I have endeavoured to explain matters to the hon. Gentleman on several occasions, as I have indicated. I doubt whether further efforts will avail much.

Mr. H. Morrison: Does it not seem to the Minister at this stage rather unreasonable that he should go on levying this tax on his own private enterprise friends in road commercial transport and at the same time break up the services of the British Transport Commission? In view of the lack of sales of vehicles, ought he not to bring it to an end and thereby enable us to have something in the way of a commercial road transport service?

Mr. Boyd-Carpenter: I do not accept that there has been a lack of sales. As the right hon. Gentleman knows perfectly well, this matter has been thrashed out in great detail in this House, and I am carrying out the instructions of Parliament.

RAILWAY FOOTPLATE WORKERS (DISPUTE)

Mr. Robens: (by Private Notice) asked the Minister of Labour and National Service whether he has any statement to make on the threatened railway stoppage.

The Minister of Labour and National Service (Sir Walter Monckton): As the House knows, on 16th April the Associated Society of Locomotive Engineers and Firemen, the union which represents the bulk of the footplate men employed on the railways, announced their intention of calling their members out on strike as from 1st May, in protest against the award of the Railway Staff National Tribunal which was announced the previous day. This award has the effect of confirming an agreement providing for general increases in rates, including increases for all footplate grades, which had been reached between the British Transport Commission and the National Union of Railwaymen, to apply from 10th January. It resulted, however, in a narrowing of the differentials for all footplate men arising from last November's award of the Tribunal. The sums involved are small—ranging from 1s. 6d. to 5s. 6d. per week—and the Society's case, as their representatives have made plain to me, is based not on any claim of hardship, but on their concern to prevent any shrinkage in existing differentials enjoyed by the footplate grades.
The decision to strike involves throwing overboard the award of the industry's own Tribunal confirming an agreement to which the other union involved, namely the National Union of Railwaymen, is a party. That union has men in every grade concerned.
In these circumstances I did not feel able to intervene. As the issue had already been before the industry's own Tribunal, I could not set up an independent body, such as a court of inquiry, to look into it. Nor could I invite the British Transport Commission to reconsider the footplate men's rates as this would involve


jettisoning an agreement which the Commission had concluded with the National Union of Railwaymen and which had been confirmed by the Tribunal. I have seen the Chairman of the British Transport Commission, who takes the view that the agreement and award should stand.
The Trades Union Congress, with which I have kept in close touch throughout, has been giving much consideration to the dispute. Their appropriate Committee has been in touch with the Society. I have this morning received a notification from the General Council of the Trades Union Congress, of a resolution in the following terms:
That the General Council (of the Trades Union Congress) ask the Minister of Labour to arrange a meeting of representatives of the British Transport Commission and the Associated Society of Locomotive Engineers and Firemen, with the object of discussing the possibility of ending the present deadlock.
In response to this request, and in view of the widespread unemployment and dislocation of our national economy which would result from a railway stoppage, I have thought it right to invite the Commission and the Society to take part in discussions at my Ministry during this afternoon. These discussions, of which I am quite unable to predict the outcome, are about to take place. I am sure that in these circumstances the House would not wish me to add to my statement at this stage.

Mr. Robens: I am sure that the whole House will be obliged to the right hon. and learned Gentleman for such a full statement, but I think hon. Members would also wish to pay tribute to the initiative shown

by the T.U.C. in arranging for the two sides to be brought together. It seems to me—and I agree with the right hon. and learned Gentleman on this point—that it would perhaps be wrong for us to debate the matter now by question and answer. We can merely hope that the results of the negotiations now proceeding at his Ministry will be fruitful and bring peace to the industry.

Mr. Collick: May I ask if the Minister is aware that the keen feeling of resentment felt by the loco men at the present position arises from the fact that it was only after the most prolonged negotiations that they recently re-established an acceptable differential wage base; and it is because the proposal now made nullifies this that the men feel that they have no option but to resist it? Whereas the total number of locomotive drivers, motor men, firemen and cleaners employed in Great Britain is, roughly, 82,000, no fewer than 10,000 of those men left their jobs in 12 months and, from that, is it not obvious that something is radically wrong and calls for immediate attention?

Sir W. Monckton: I think it most undesirable that I should go into any of the questions which will rise for discussion and which, I must say, have no doubt been discussed before the Tribunal.

BUSINESS OF THE HOUSE

Proceedings on Government Business exempted, at this day's Sitting, from the provisions of Standing Order No. 1 (Sittings of the House).—[The Prime Minister.]

Orders of the Day — FINANCE BILL

Considered in Committee.

[Sir CHARLES MACANDREW in the Chair]

Clause 1.—;(CHARGE OF INCOME TAX FOR 1955–56 AND SURTAX RATES FOR 1954–55.)

Motion made, and Question proposed, That the Clause stand part of the Bill.

3.33 p.m.

Mr. G. R. Mitchison: During the last two days we have had a considerable discussion on the amount that the Chancellor can allow in relief of taxation for the coming year. On a question of that sort, no doubt the economists will have their views, but it has always seemed to me that much of the essential information necessarily lies with the Chancellor himself, and I do not propose to revert to that question in discussing this Clause.
The fact remains that the Chancellor has come to the conclusion that£155 million can be remitted during the coming year, and out of that sum practically the whole is to come from Income Tax concessions, the most important, the most fundamental, of which, of course, is the reduction in the standard rate.
I think that in the course of Answers given yesterday to Questions considerable light was thrown on the practical effect which this reduction in the standard rate will have in the coming year. When I speak about the practical effect, I am referring to the effect which it will have on the ordinary people in the country—those whom we represent in this Committee. Out of the£155 million, no less than£42 million goes otherwise than to individuals; that is to say, it goes to corporations, particularly companies, to which my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) referred on Friday.
I shall not say any more about it than that it seemed to me somewhat incongruous that, when we had a reply to that speech, we were told that the remissions of tax in this Budget would provide relief to all those who work by hand or by brain. It seems to me somewhat difficult to understand how a

company, which is, no doubt, a necessary part of the economic structure, can be regarded as something which works by hand or by brain.
When we come to the actual workers, we have to consider the individual relief. It amounts to£110 million altogether. It is given mainly by the change in the standard rate of Income Tax, but for the sake of simplicity I will refer to the total of the relief including not only the standard rate reduction but also some other minor concessions. It is obvious that the standard rate is far the most important part.
The first thing which strikes me is that it is remarkable that the total relief given in this Budget to individuals, by Income Tax standard rate reduction and otherwise, amounts to almost exactly the same as has been put upon the people by Tory dear money policy, that is to say, to the amount of the increase in the National Debt charges and to the amount of the increase which may be expected next year. The figures of£30 million and£85 million were given by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell). They add up to£115 million, which is a little more than the£110 million which is given by the Budget to individual taxpayers. The conclusion follows that if it had not been for the dear money policy the relief given to individuals could have been doubled.
I wonder what conclusion we are to draw from this. We are told that the protection against any inflationary effects, against any consequent trouble in our balance of payments—any general restriction on consumption that may be required in consequence of these reliefs—is to be made by a further use of the Bank Rate. We are told that it is a flexible weapon. I remember the impact of flexible weapons when I was younger, and I can assure the Chancellor that a flexible weapon, particularly one with knots in it, can hurt quite a lot. I would much sooner that what was proposed to be done had been doubled and cheap money preserved for the benefit of councils, among other people, and generally for the benefit of those who have to borrow as against those who are able to lend.
I turn to the incidence on the particular taxpayer. The figures given in column 740 of today's OFFICIAL REPORT are most


remarkable. Roughly speaking, half the people who will have relief from the reduction in the standard rate of Income Tax, or over 8 million, will have a total relief of£19 million out of the£110 million. That means they will receive, on the average, about 10d. a week—that is half of them, and the poorest half.
3.45 p.m.
Next we come to the higher grades, who number 8,350,000. They will receive 2s. a week on the average. Then we find that those who are earning£700 to£1,000 a year, not exactly plutocrats, will receive 3s. a week. As we proceed to the higher grades, the relief given becomes quite disproportionate. Those in the£1,000 to£2,000 group will receive 7s. a week. The average figure of 30s. a week in the case of those who are in the£2,000 and over income group has comparatively little significance. The number in the group is comparatively small—325,000—against the millions in the lower groups of whom I have been speaking and, of course, in that group particularly the higher remission goes to those who have the larger income. This is bound to be and always will be the effect of a straight remission of 6d. or 1s., or whatever it is, off the Income Tax.

Mr. Gerald Nabarro: Hear, hear.

Mr. Mitchison: I know that that is greeted with loud approval from the benches opposite. It seems that hon. Members opposite prefer that those who are already enjoying the larger incomes and, therefore, paying the bigger taxes should receive the higher proportion of what is available by way of remission. In general, we on this side of the Committee totally dissent from that view. We fully recognise that Income Tax is, of course, a tax subject to reliefs in the lower groups and to that extent the gross inequity that it would otherwise cause is remedied.
In successive Governments we have always insisted on and emphasised those reliefs. When my party were in office we made it our first care to relieve at the bottom of the scale, and we did not so frame Budgets that these disproportionate amounts passed to this disproportionate extent partly to limited companies and partly to those who are paying the highest

amounts in tax. The distribution of relief in this Budget is one which is grossly unfair in favour of the Surtax payer and grossly unfair against those who are right at the bottom of the Income Tax scale.
To do this at this time seems to be inviting trouble. We already have an economy in which there are some signs of inflation. Notwithstanding any pledges given about them at the last General Election, prices, broadly speaking, have continued to rise. To put it at the very lowest, there is still a considerable danger of that rise increasing, and we have just had a statement from the Government Front Bench, which is by no means the first of the statements made from there recently, about wage claims and threats of industrial action in consequence.
To choose this moment deliberately to grant relief in this form seems to me to be inviting trouble from that narrow point of view. I can go one stage further. Speaking for myself—and I think that many of my hon. and right hon. Friends will agree with me—I cannot regard as satisfactory any remission of tax which accepts the present distribution of wealth as fair and right. I have personally benefited from an unequal distribution of wealth and I have spent many years of my life, and propose to go on doing so, trying to remedy that unfairness as far as I can.
I believe that to confine any relief which he can give to a straight reduction of Income Tax is, to the extent to which the Chancellor has done it, politically and economically dangerous, and morally wrong at the present time. I say without hesitation that if this sum of money were available for distribution by me I would far rather have used it to remove altogether from the Income Tax liability some of the taxpayers at the bottom of the scale—by way of further reliefs, partly by reduced rates, partly by children's allowances, and partly by making much more adequate provision for the unemployment which has reared its ugly head again in Lancashire. To give the companies and corporate bodies the£42 million which the Chancellor proposes to do, and to give these large amounts to the highest range of taxpayers—the Surtax payers—seems to me, at this time, a disastrous and immoral mistake.
I know that a straight reduction has a classic simplicity, but I am sure that the


right hon. Gentleman is already aware that both what is right and what is wrong may have a classic simplicity. In this case the simplicity of this Measure is calculated to hide the bad moral effects of what is being done. Therefore, while it is perfectly obvious that we are not proposing to divide upon this Clause, I would far rather have seen, if necessary, no remission in the standard rate, but the same amount of money going to those who are now at the bottom of the scale.
If there is any question about who needs it most, surely it is within the knowledge of right hon. and hon. Members opposite that when one speaks of the burden of taxation one must have regard not merely to the amount of taxes paid by an individual or company, but to the capacity of that person or company to carry it. At present, I believe that the burden weighs most heavily upon those at the bottom of the scale, at a time of rising prices without a sufficient corresponding rise in wages and earnings. Naturally, we are not going to vote against this reduction.

Viscount Hinchingbrooke: Why not?

Mr. Mitchison: Why should we?

Mr. Raymond Gower: If this matter is so immoral and dishonourable, as the hon. and learned Member suggests, why should his party not divide against the Clause?

Mr. Mitchison: The hon. Gentleman has completely misunderstood what I have been saying. He must know that the Opposition has no power to remit the same amount by other means and to other people, in a better way. We must obviously accept the remission; there can be no question about that, But we are entitled to say, and we do say, that if we had had this amount of money to remit we would not have remitted£42 million of it to limited companies, and we would not have remitted such a high proportion of it to the higher range of taxpayers.
On the contrary, we would have used every effort to take more people out of the Income Tax scale and make such reductions in rate as we could at the bottom of the scale, and not in the present form, which means that the greater part of those reductions go to persons at the top of the

scale, who thus get a wholly disproportionate benefit.

Mr. Frederick Gough: The hon. and learned Member accuses my hon. Friend of ignorance. Perhaps I am also ignorant, but it would be fair to the Committee for him to remind us that in his previous Budgets my right hon. Friend has released thousands of people from paying any tax whatever.

Mr. Mitchison: So did the Labour Government, and upon a larger scale. The very simple answer to that reminder is that what we have to consider now is what is right to be done now. The fact that the Chancellor may or may not have done some right in the past is no reason why he should discontinue to do so now, and turn from what is right to what is wrong.
It is for that reason that I object, not to the fact of the remission or to the amount of remission—for that has already been discussed—but to the fact that the money is being remitted in such a way that those who receive the greatest benefit from it are those who need it least; the limited companies and the Surtax payers. The ordinary man and woman who has returned us to Parliament, and will shortly have to do the same, or something like it, again receive the least benefit from a straight reduction in the tax rate.

Mr. Harold Steward: In the short time that I have been a Member of the House I have witnessed upon no fewer than six occasions the kindness extended to hon. Members making their maiden speeches. I am certain that in the more restricted atmosphere of a speech upon a Clause in the Committee stage of a Bill I shall be in even greater need of such kindness and tolerance from the Chair.
After the speech of the hon. and learned Member for Kettering (Mr. Mitchison) I was left in some doubt whether hon. Members opposite had made up their minds whether it was more desirable not to give any reliefs, and so guard against inflation, or to give reliefs which themselves will tend to guard against inflation. I believe that in this simple, direct Bill, judged in the context of the last three Budget statements, we have something which, while guarding against inflation, will give the greatest measure of relief in the most widespread manner.
It is simple, direct, equitable and, from my point of view, very welcome. It gives practical expression to what I believe to be the whole spirit of the Bill, as defined in two passages from the speech of my right hon. Friend when he was explaining his Budget proposals. He said:
If we are to achieve the full increase in production of which the economy is capable, we must continue to provide encouragement to the whole productive effort of the country. We must seek fresh incentives to the forces of growth by the stimulation of output and productivity.
Later in his speech, he said:
I am satisfied that the world at large will applaud our continuing climb back to the uplands of prosperity, and I rely on our people to respond to the trust which I have placed in their sure and steady steps."—[OFFICIAL REPORT, 19th April, 1955; Vol. 540, c. 56–61.]
That epitomises the policy of my right hon. Friend. It has already been said that this Budget demonstrates the difference between the general outlook of the two political parties. The message of this Budget is "Trust the people"—not one section, but all sections. I am quite content to believe that that is, indeed, the root of our Conservative faith, and history has demonstrated time and again that when trust is placed in the people it is never abused.
It has been suggested that the giving of further assistance to industry should have been achieved by way of investment allowances. I am glad that in this matter, as in the rest of the Bill, the Chancellor has demonstrated his trust in industry, in just the same manner that he has demonstrated it in the wage-earning and salaried classes. He has left them freedom of action and freedom of manoeuvre. I am certain that his trust will not be misplaced.
4.0 p.m.
For 37 years I have worked in industry. I have worked alongside the hourly-paid employee. For many years I have worked with the clerical and development staffs. More recently, I have played a modest part in the executive management of a large company. I would surrender to no man my admiration for what is commonly termed the British working man—I have worked with him for too long. I regard him as the most likeable, most lovable, most stubborn, most independent, most remarkable—

and at times the most unreasonable man alive.
At the same time, he is probably epitomised in that slightly inebriated husband who said to his wife, "I will do anything in reason, Maria, but I will not go home." He is not moved by reason and abstract scientific thought, but by an inner course that makes him tick and which, I believe, will respond to the type of trust placed in him by the Chancellor.

To the craftsman and the professional worker this relief, and much more, is long overdue. Their differentials have been reduced, their difficulties have been increased, and in no other section has the disincentive principle and the disreward of higher responsibility been more marked. To a large extent he has always been, and still is, the goose that lays the golden egg—the middle stratum of our society—which has been exploited and plundered by every Chancellor, irrespective of party. The relief offered to them in this Budget is long overdue and very well earned. At all times I believe that anything which the Chancellor can afford would be well given to that section of the public.
It has been suggested that the relief given to industry will be used only to disburse higher dividends to shareholders. The last two years have shown—and it is demonstrated clearly in the White Paper—that the incentives given to industry are resulting in a steady build-up of new fixed capital assets. In this respect it must be appreciated that there is, of necessity, a time lag between the conception of any original capital project and the expenditure of the money necessary for its implementation. I believe that the next few years will see a vastly accelerated upward trend in expenditure on building and plant as a result of schemes which have already been initiated.
This Parliament has witnessed two changes which are very often lost sight of in relation to matters of this kind. The first is that we have changed from a buyers' to a sellers' market, with all the fierce competition that that entails. That is a vast change which private industry has taken in its stride and has continued to expand. Secondly, we have witnessed a welcome change from Government to private buying. While this is very wel-


come, it must not be forgotten that nonrecurrent but quite vast expenditure in the building up of private stocks has taken place and has made further demands on our working capital. Looking at the White Paper, I believe that since those stocks are so widespread, and since prices have tended to rise, there may here be a hidden asset of which full account has not been taken. If that is so that asset will show to our benefit in the future.
Surely, Sir Charles, it is right to claim that the industrialists have done, and are doing a fine job under the most difficult conditions, and that, in the common weal, the relief extended to them by this Budget has been well earned and fully deserved. It is primarily an encouragement to further effort, and an encouragement to that ploughing back of further capital which is, in itself, the destruction of any further inflation.
If we can agree on the desirability of the cut there still remains the overall question of how far we increase production to an extent which would overcome any inflationary pressure caused by greater spending power. Let me here say that I have yet to meet the industrialist who does not require—and desire—conditions of full employment to continue. Profits are not made from people who are unemployed; they are made from full employment. A high and stable level of employment and production is one of the prerequisites for the successful conclusion of any industrial activity.
Full production is with us. There is, therefore, a limit to the extent to which we can obtain further production by means of added labour. The undesirability of working further man-hours within the same labour force is quite apparent. The limitation is quite real and very clear. The only answer which meets all the circumstances of the case is one which is so often spoken about, but, by many of our people, not too clearly understood. It is the getting of higher productivity generally; in other words, the better utilisation of our resources, higher efficiency in the use of our manpower and machine power, fuel, materials, transport, etc. without reducing quality of turnout—more consumer and capital goods from the same ingredients.
It is not enough merely to raise production. The cost per unit quantity has to be reduced. We have seen production

rising ever since the war, but has there been a corresponding rise in productivity? There has certainly been some rise in productivity, but it has not been a corresponding rise. I suggest that we have been far too ready to mortgage the benefits of increased production before the event. The result has been that, by the time the increased output has found its way to the consumer, prices have again risen, and the continual spiral of wages, costs and profits has taken another upward turn in the cycle. Nevertheless, with good will and the exercise of a full sense of responsibility by all concerned there is enormous scope for a real and continuing increase in productivity.
I was very pleased to hear a tribute paid to the work of the British Productivity Council. As Chairman of the Merseyside Committee I have had some experience of the work of the Council, sponsored, as it has been, by the Government of the day; successive Governments have taken the same attitude to its work. There is a growing and rapidly developing organisation in which both sides of industry are exchanging their views and common production problems. Enormous good will is being created, and by the accumulation and dissemination of information throughout industry—always one of the most difficult tasks—there is a wider appreciation of each other's difficulties and anxieties.
The free exchange of information not only between firms engaged in the same industry but between firms in differing industries and firms of relatively different size and scope has been taking place on a wide scale. As a result, there is gradually building up a more widespread use of modern techniques. In so far as they are applicable to conditions here, the things learned by the Anglo-American Council on Productivity are filtering through the whole network of our industry, both nationalised and private.
This work is still in its infancy and the potential benefits are still largely untapped. I believe that the growth of that work is, in itself, a corrective of any signs of inflation which may have been apparent. Our resources are greater than at any time in the recent past. More savings are available and they will be increased by this present Bill. Nevertheless, I believe that there is scope for greatly increased capital resources, par-


ticularly in small industries, which constitute such a large proportion of the pattern of our industrial life.
Secondly, I believe that there can be more enterprising and venturesome work in pioneering new methods. When I met a colleague who went to the United States recently, as so many of us have done, I was impressed by his statement that he believed the success of American production was derived largely from an attitude of mind over there by which they believed in mechanisation for its own sake; they recognised that when mechanisation had been accomplished the ultimate benefits were greater than those which were immediately apparent when making an assessment of the position.
I believe that if we in this country could make a more energetic approach in that way, believing in mechanisation in the first place for its own sake, and so redeploying any labour saved by its use to further gainful employment, it would vastly increase our productivity. In studying the economics of new projects we are apt to lose sight of these two factors.
Thirdly, I believe that in these new and modern conditions there is room for amendment in the system of wage negotiation. I believe that the trade union system in this country, at its best, is better than that in any other part of the world. It is spotty in many places, just as management is spotty in many places, but we are approaching a new set of conditions in which we shall be distributing a higher standard derived from greater productivity. I believe that the present set-up of national arbitration on every matter is too remote and is apt to lead to troubles on the shop floor.
I believe that national negotiation should be retained, and let me add here that I am no opponent of the large unions. I believe that the large union still has its place in the inspiration which it can give, but I believe that the district committees could, and should, be used to a much greater extent and with greater advantage on some of the secondary problems which beset industry.
Finally, I would suggest that the time is rapidly approaching—and is recognised by many leading trade unionists to be so—when the strike weapon will become

obsolete and it will be found that negotiation is the better way to succeed on all fronts. I believe that no Government would wish to withdraw the strike weapon from the hands of a trade union to be used in the last resort, but I believe that more and more attention can and will be given to the peaceful settlement of strikes by negotiation. Public opinion is the judge of right or wrong in this matter. Within that context I believe that there is a growing volume of public opinion which believes that the unofficial strike should be abolished.
I believe that there we are not getting a reflection of the true will, even of the small number of people who are often concerned in these unofficial strikes, and that a means will have to be found within the next few years by which the total will, not part of it, of any union concerned will have to be fully demonstrated before any strike takes place.
With these things combined I believe that it is possible vastly to increase productivity. I believe that the hope expressed by the Chancellor in his Budget statement will be demonstrated as correct, and that when he presents another Budget statement in twelve months' time—as I am sure he will—we can hope for further reduction along the same lines.

4.15 p.m.

Mr. Roy Jenkins: Doubtless all hon. Members of the Committee will wish to join me in congratulating the hon. Gentleman the Member for Stockport, South (Mr. H. Steward) on having surmounted the ordeal of a maiden speech. It is always an ordeal, but it may perhaps have been more so in the case of the hon. Gentleman because the imminence of coming events may have left him with less choice of the occasion on which he should speak than we normally have. I warn him, however, that he is on dangerous ground in making a maiden speech during the Committee stage of the Finance Bill. I was foolish enough to do that myself, and since then I have not been able to disentangle myself from the subject.
It is usual on these occasions to say that we will listen with interest on many future occasions to what the hon. Gentleman has to say, but in view of the highly marginal nature of his seat, it is difficult


for me to say that this afternoon. Therefore, I will compromise by saying that if he can find another occasion within the next ten days on which to address the House, we shall be glad to hear him.
The hon. Gentleman, who spoke with great force, clarity and confidence, took the subject somewhat wide, as is the privilege of maiden speakers, but I have no doubt that you, Sir Charles, will be glad to hear that I propose to take it more narrowly. What we are dealing with primarily in this debate on the Question "That the Clause stand part of the Bill" is the standard rate of Income Tax.
The first thing I want to say to the Chancellor and the Committee about the standard rate of Income Tax is that it ought to be abolished. I see the hon. Gentleman the Member for Kidderminster (Mr. Nabarro) looking pleased and surprised. By that I do not necessarily mean any sweeping reductions of direct taxation, but that the term "standard rate" has become a most misleading misnomer.
The "Economist" made some interesting remarks on this subject last week. The term "standard rate" gives the impression that it is the rate of Income Tax which is paid most widely by almost everybody. In fact, very few things could be further from the truth. The standard rate is primarily a rate which applies to company taxation. The standard rate of Income Tax, as such, is paid by nobody who has a wholly earned income, because up to£2,000 a year the taxpayer gets earned income relief, so never pays the 8s. 6d. or 9s. in the£. Above£2,000, when he loses his earned income relief, Surtax is put on top of that. Therefore, somebody who lives on earned income never pays on any slice of his income at the standard rate.
What the standard rate of Income Tax applies to is, first, taxation of companies and, secondly, taxation on unearned income over the range of£600 to£2,000. It is unfortunate that a form of tax which applies so narrowly should have applied to it this term which appears to give it a general significance. Of course one cannot lay this at the door of the Chancellor, because it has long existed in our taxation system. I suggest that there are three distinct components. There is the normal rate of tax upon com-

panies, there is the rate of tax upon earned income, and there is the rate of tax upon unearned income. It would be greatly for the clarity of the Committee, and even more of the country, if we could get away from that term and separate these three components, dealing with them separately if necessary.
Now I want to refer to the effects of the cut in the standard rate upon companies. As the Chancellor has told us, and as is clearly the case, and as many people, including the hon. Member for Stockport, South, have mentioned, a substantial part of the remission of taxation involving a cut in the standard rate falls upon companies. I would not say that companies do not play an important part in our national economy, but we need to consider carefully whether a cut in the rate of company taxation, such as is envisaged in this Clause, is likely, in present circumstances, to produce desirable developments from the point of view of the national economy.
We have had a number of statements from the Chancellor and other members of the Government indicating that it is beyond all doubt that at present the cut in the rate of taxation upon companies is bound to be in the national interest. But I ask them to approach this question not simply from the point of view of vehement separation, but from the point of view of trying to argue and consider it a little more closely.
I would suggest to the Chancellor that on past experience during his tenure of office there is very little evidence for saying that a cut in the standard rate of taxation in so far as it affects companies produces the sort of benefit which he wants. What are we primarily concerned about regarding companies at the present time? We are all very much concerned—it is common ground between both sides of the Committee—about the rate of investment.
Suppose we look back over the past three Budgets. We see that in the 1953 Budget, when the Chancellor made a cut, the improvement in the rate of investment was very small. Indeed, if one were to try, admittedly on a rather slender basis of evidence, to establish what happened as a result of the cut in the standard rate so far as company development was concerned, one would


say on the evidence that there was practically no effect at all on the rate of investment—an increase, according to the Economic Survey, of about 1 per cent. for the manufacturing industry, and a very much more substantial effect on the distribution of dividends of about 20 per cent.
If we look at the 1954 Budget, when there was no cut in standard rate but when there was the institution of the specific incentive to invest—the investment allowances which we on this side of the Committee were very glad to support—then, so far as can be seen, we began to get some improvement in the rate of investment.
This year we go back to the older weapon of the cut in the standard rate, but no investment allowance. Presumably, the Chancellor hopes to see different results from those which he saw in the past. But I put it to the Chancellor, on the basis of this evidence—which I do not say is conclusive, because it is over far too short a period—that some specific incentive like the investment allowance is far more effective than a cut in the standard rate which is more inclined, on the basis of past evidence, to result in an increase in dividend distribution.

The Chancellor of the Exchequer (Mr. R. A. Butler): Does the hon. Gentleman mean that there has not yet been time to register the effect of reducing the standard rate on investment?

Mr. Jenkins: I was dealing solely with the last occasion. I was trying to compare the effect of a year in which we had an investment allowance but no reduction in the standard rate with a year in which we have a reduction in the standard rate but no investment allowance. Discussion at this stage of the Finance Bill—a discussion of the standard rate which we have in some form or another every year—necessarily turns on the attitude of the two sides of the Committee towards redistributive taxation generally. We on this side, although we do not believe in taxation for taxation's sake, believe that with the present redistribution of income at source which there is in this country a high degree of redistributive direct taxation is necessary if there is to be any degree of social justice.
I always find it very difficult to work out at all clearly what is the attitude on the other side of the Committee on this point. One frequently hears back benchers on the other side—the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton), and Viscount Chandos, when he was in this House, used to do so—talk as though the aim of the Conservative Party, provided that it could be done consistent with meeting our national bills, which, we hope, will be a constantly reducing total, was to get back nearly, at any rate, to pre-war rates of direct taxation.
I am never sure of the right hon. Gentleman's own attitude. Sometimes he talks—and has talked perhaps more this year than at any other time—as though to say that this reduction in the standard rate, which has been argued time and time again, means a very much higher proportion of reduction for people with big incomes than for people with small incomes, and no reduction at all for those with the smallest incomes.
It has never been clear whether his aim is to go on further and further, as and when it becomes possible, to try to get back to something like the 1938–39 level. I was still more confused on this point, although it was not a confusing speech, after listening to the very agreeable, fluent and able speech of the hon. Baronet the Economic Secretary to the Treasury when winding up the Second Reading debate on the Bill. He took a sentence from the speech that my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) made in the Budget debate, in which my right hon. Friend put a point rather similar to this and talked about a reactionary Budget going back to pre-war days.
The hon. Baronet replied to it with great force, saying that one could really not assume that this was so and that a number of people had been exempted from tax altogether and that the most wealthy section of the population was still paying, on a very large slice of its income, tax at 18s. 6d. in the£and, indeed, that people with£8,000 a year and upwards paid approximately three-quarters of their income to the Chancellor. He made the point with a great deal of pride, as if to say, "Here we have solid facts to put before the country." I should like to know from the Chancellor or from


the hon. Baronet, what is the attitude of the Government on this matter. Is it, as he announced, or appeared to announce by the tone of his voice, with pride, redistributive, or is it, in his view, an unfortunate legacy from the past which he wants to get away from as quickly as he can?
It is very important when considering this point and what may be the future if, as we hope, will not be the case, the Chancellor has the opportunity of introducing more Budgets, to know in what direction he wishes to move—whether he thinks there is value in redistributive taxation or whether it is merely something imposed by the exigencies of the present situation which he would like to get away from as soon as and as far as he possibly can.

Mr. Cyril Osborne: The hon. Member for Stechford (Mr. Roy Jenkins) really asked this question: will a cut in the rate of tax on companies be in the best interests of the nation? I think that is a question which I should try to answer. I should like to answer it from the business man's point of view. I probably cannot put my case as fluently as the hon. Member for Stechford put his case, but I should like to set out the case as the business men see it and as they see the operation of the 6d. reduction in the standard rate of tax.
I am putting the point of view not of the great corporations but of the smaller business men—units employing, say, fewer than 1,000 people—who are the majority of the employers in this country. They still have the ownership and direction of their business in their own hands, and personal contact between the owners and the directors of the businesses and the workers is direct.
I would remind hon. Members that businesses of that nature can have new capital only for expansion either from the resources of the families engaged in them or from what is left over through profits after they have paid taxation. On the point that is often made that a reduction in taxation will increase dividends, that does not apply to that sector of our economy, because there are no dividends, and on the point that may be raised that it would induce the owners to increase their own drawings, my experience would tend to make me believe that that would not be so since they themselves are pay-

ing so much in personal taxation. To those people the 6d. reduction is of vital importance, and on their behalf I welcome it and thank the Chancellor for it.
4.30 p.m.
The right hon. Member for Leeds, South (Mr. Gaitskell) put the point this way on 20th April:
There is not the slightest doubt that companies are once again the favourite children of the Chancellor. On his own admission, they receive£40 million—I am told that the actual figure is£45 million—out of the£100 million which these changes in the standard rate and other rates will cost, if we exclude the allowances."—[OFFICIAL REPORT, 20th April, 1955; Vol. 540, c. 198.]
I should like, as far as I am able, to try to answer the point, because that really is the issue between us. Will it be a bad thing or a good thing for the nation that the£40 million which the right hon. Gentleman calculates will go to private companies should be given to them? In passing, I would say that the Chancellor is not giving largesse to the companies to the extent of£40 million; he is merely taking from them£40 million less than he was taking previously. The private trader has earned that money in straightforward and open competition.
The right hon. Member for Leeds, South asked whether that was the right or the wrong thing for the Chancellor to do. Both sides of the Committee ought to be clear on this matter. We are all agreed that a mixed economy such as we have today must continue. Only the Communists want full-blooded nationalisation of everything. If that be so, and I understand that at present the mixed economy consists of 80 per cent. private enterprise and 20 per cent. nationalised enterprise, it must be in the interests of the whole nation, including the workers as well as the smaller taxpayers, that the 80 per cent. private economy should be kept in the highest state of efficiency.
Incidentally, I would remind the right hon. Member for Leeds, South and other hon. Members opposite that it is the private sector which has the most difficult task in the whole economy. It is the pricate sector which has to face competition in both the home market and the export market. The nationalised sector, consisting of coal, gas, electricity and transport, on the whole represents sheltered industries.
At present, those of us who are engaged in trades where we have to try to sell


abroad are very conscious that competition, from Germany in particular, is increasing considerably. The Germans had many of their factories destroyed during the war, but they have rebuilt them and have some very fine modern factory layouts, and those factories are filled with the most up-to-date machinery. We shall increasingly feel the competition from the products of those modern factories. This is true not only of Germany, but also of Japan and Italy.
On the other hand, far too many of the factories in this country are between 30 and 50 years old. A few weeks ago I sold a factory which was 100 years old. I was very glad to get rid of it. I got a very good price for it. One of the greatest needs of industry today is modern factories. During the war industry had to bear 100 per cent. E.P.T. plus Income Tax at 10s. in the£, and there was not a great deal left to meet the charges for modernisation and re-equipment.
Therefore, as a business man, I welcome the 6d. reduction, and I can assure the Chancellor that by business friends—I am speaking mostly for men in medium-sized businesses—will use the reduction to good advantage for the benefit of the nation. Provided that the bigger companies do not distribute the benefit in increased dividends, which I am sure they will not do, this cut can obviously be of benefit to the whole nation.
I will give an example from an industry with which I am associated to show how the 6d. reduction will help. We are faced with three main expenses. First, there is the very difficult problem of paying for new machinery. The Midlands hosiery trade could buy a circular knitting machine pre-war for about£250. Today, such a machine costs about£1,100; it is true that it is rather different but, on the whole, it does the same sort of job. It is true that we can write off the original cost of£250, but we have to find new capital for the remaining£800.
If we are to compete in America, we must continue to have the finest new machines, so we want the Chancellor to leave us with as much of our profits as he can to enable us to reorganise and re-equip our factories. To that extent the 6d. reduction is fully justified, I support it with very great pleasure, and I am very grateful to the Chancellor for it.
Our second burden is that it is costing us about four times as much to carry our raw materials. Before the war our Merino wool yarn 64's cost about 3s. 6d. per lb. Today, they cost 14s. or 14s. 6d. per lb. Therefore, to carry the same volume of work in progress and in stock we need four times the amount of capital. I am again speaking of the small and medium-sized family businesses. Where will the extra money come from to enable them to do the same work, if we are not to be allowed to have a little more of the profits which our trade has legitimately earned? Again, I am grateful to the Chancellor for the 6d. reduction.
The last charge is perhaps the worst. One of my factories is having a new wing added to it. The cost is almost fantastic when compared with pre-war. The cost of building a modern factory is very great. Also, it is not possible to get a firm price for the work because the contract is subject to changes in labour and raw materials costs. We estimate that the cost of the work will amount to about 70s. per square foot; it is an enormous task for a medium-sized manufacturer to build a factory of any size at such a price. Where will the men running the smallish family businesses get the capital with which to keep themselves up-to-date unless more is left to them from their profits? These three factors are present not only in the hosiery trade, with which I am concerned, but in the general trade throughout the country.
I would remind the right hon. Member for Leeds, South that the private sector of industry is 80 per cent. of our economy. It will be admitted that we pay the highest wages in the country. We provide better conditions for our workers and treat them better than do the nationalised industries. Therefore, from the workers' point of view, it is in their own interests that the private sector should be maintained at the highest state of efficiency.
I have always thought that the Chancellor of the Exchequer has two nightmares to contend with. The first is that the nation should become teetotal and non-smoking. In that case, I do not know where he would get his taxes. The second is that private industry should fail to make profits. I would remind hon. Gentlemen opposite of a fact that they should never forget. It is that the Welfare State could not be maintained


unless private industry made profits for it to tax. There would be no Welfare State if the private sector of industry followed the example of some of the nationalised industries, and produced losses. There would be no old-age pensions and no welfare pensions. The successful business man, conducting his business properly and well, and making good profits year in and year out, is the most practical supporter of the Welfare State.

Mr. A. Blenkinsop: I suppose the hon. Member would agree that the Welfare State provides a market for him and other manufacturers to use.

Mr. Osborne: Of course I do. I am trying to make the point that the 6d. which the Chancellor is now giving to us, and which the right hon. Member for Leeds, South thinks unwise and antisocial, is in the best interests of the country and of all sections of the country.

Mr. Dryden Brook: As one business man to another, I can tell the hon. Gentleman that all this is very interesting. Has the hon. Gentleman reckoned out how much this 6d. will give to the small business to finance the extra stocks, the higher prices of stocks and the development of his business? The business man with a profit of£30,000 a year, which is not an inconsiderable figure, will get£750 out of this reduction in the Income Tax with which to finance all the things that the hon. Gentleman has been talking about. We must keep the thing in perspective.

Mr. Osborne: That is quite true, but I was taught as a little boy that many a mickle makes a muckle, or, every little extra helps. We should be worse off if we had not got the 6d. If the hon. Gentleman is arguing that 6d. is not enough, I should be very glad if he would suggest to the Chancellor that he should double the amount.
The fear of the right hon. Member for Leeds, South is that this amount will be distributed in extra dividends. I would ask him to remember that in the last three or four years there has been developed in the City of London and throughout the country the system of take-over bids, a development which I deplore immensely. The development has been

possible only because men in London, from the provinces, have seen good, old-fashioned businesses where dividends have not been paid out in anything like a proper proportion of the profits earned. They have bid for the control of companies that would be better left in the hands of the men who are running them; but it is fair evidence that the businesses have not been paying excessive dividends from their earnings. As a matter of fact, there was trouble in the Cunard Steamship Company meeting last week over this very point.
I can reassure the right hon. Gentleman that there is no danger that this money will be unwisely spent or unwisely distributed in dividends. On the other hand, there is a much greater chance of its being used for re-equipment and modernisation. I would thank my right hon. Friend for the proposals he is making, and assure him that the business community support him in what he is doing and in his efforts to raise the standard of living of the whole country over the next 25 years.

4.45 p.m.

Mr. Sydney Silverman: I am not an economist or a business man. I approach the questions raised in the Bill from what I think may be the point of view of the man in the street, whether professional or working.
There was an interesting discussion during the debate on the Budget Resolutions whether the proposals were a handout by the Government to the privileged few or were an election bait held out to the many. Government speakers were inclined to taunt my right hon. and hon. Friends with confusion of mind, saying that we could not make up our minds which of those two conflicting interpretations was really in the mind of the Government. In an attempt—a vain attempt, as it turned out—to clear up the confusion, I asked the Financial Secretary to the Treasury which he said it was. The answer was that he did not know.

The Financial Secretary to the Treasury (Mr. Henry Brooke): My answer was that I was unable to clear up the confusion in the minds of hon. Gentlemen opposite.

Mr. Silverman: The hon. Gentleman must realise that that was a very inadequate answer.

Mr. Nabarro: It was true.

Mr. Silverman: I asked him to decide which of those two things was in the Government's own mind. Of course, he was too honest a man to reply that neither of them was. Another Government with a better intention would have been able to reply that they had neither of those things in their mind at all, but were merely doing their best, as honest trustees, to administer the country's finances to the national advantage. The hon. Gentleman did not give that answer, not because he did not think of it but because he knew that it was not true.
I suggest that the real answer is that it is possible—the Budget, and especially its Income Tax proposals, are the clearest possible instance of it—to give real benefits to a few and, at the same time, hope to deceive the many into thinking that they are getting benefit, too. That was the intention of the Chancellor—if he will allow me, without unkindness, to say it. The subsequent debates have removed a number of things out of controversy. The right hon. Gentleman admits that the great bulk of the advantage to be derived out of his Income Tax concessions will go to those who need it least.

Mr. R. T. Paget: Surely there is another explanation. Is it not that the right hon. Gentleman tried not to buy the electors but to buy the Conservative Party?

Mr. Silverman: If it were so, I should have thought that he could have got it cheaper. I see no reason why this Chancellor of the Exchequer, above all others, should give such an inflated price for something of so little value. I think that my explanation is a fairer one than that of my hon. and learned Friend the Member for Northampton (Mr. Paget). If his is better, as it may well be, no doubt he will get an opportunity of explaining it.

Mr. Paget: My hon. Friend always bears the mark of charity.

Mr. Silverman: That is only one of the things on which I differ from the Chancellor of the Exchequer, who never makes any such effort.

Mr. Gower: If my right hon. Friend really wanted to command the party, would it not have been cheaper for him

to buy a smaller group which might have been available in the House?

Mr. Silverman: The hon. Member ought to address that question to my hon. and learned Friend the Member for Northampton (Mr. Paget), whose point he has taken up. I have rejected it and prefer to stick to my own.
I was saying that some things were no longer in controversy. It is admitted on both sides that the intention of these proposals is to give the great bulk of the advantage to those who need it least. If one may mix metaphors a little, he intends to give the lion's share to the wolves.

Mr. Nabarro: How dreadful.

Mr. Silverman: The hon. Member is quite right to be ironic. I understand the irony of his interjection. He does not think that it is dreadful and we do; and that is the whole point of the debate.
It is conceded that the devastating analysis of the Budget proposals, which was made on the first day of the Budget debate by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), was in no way wrong in its figures, or description of what the effect was. That is not the issue. It is admitted that he was right. I think that it was admitted by every speaker in the debate. The right hon. Gentleman the Chancellor admitted it.
The difference is whether we regard that as a good thing or a bad thing to do. There is no doubt about what the effect is. One has only to look at the Financial Statement and the tables on Income Tax to see that my right hon. Friend was really guilty of considerable understatement in his criticism of the effect. That is not the dispute. The dispute is whether it is good social and economic policy to do it and we say that it would be good social and economic policy to do it another way.

Sir Ian Fraser: Are companies, big and small, included among the wolves to which the right hon. Member for Leeds, South (Mr. Gaitskell) devoted so much of his censure?

Mr. Silverman: There was a clamouring pack behind the Chancellor and the clamouring pack got most of the booty.
If the hon. Member does not like my metaphor, he can apply any part of the zoological kingdom to this which he prefers.

Sir I. Fraser: Sir I. Fraser rose—;

Mr. Silverman: I do not want to debate that with the hon. Member.
I want to come to the point which seems to me to be the genuine point in controversy between the two sides, namely, if one has Income Tax reliefs to give, or if one has taken hundreds of millions of pounds out of the taxpayers' pockets that confessedly one did not need to take, how one shall remit that taxation in the following year. There has been, admittedly, for four years a rising cost of living. Nobody denies that. There is controversy as to whose fault it is. There is controversy about whether the rise in wages has overcome the rise in prices or not, whether real wages have improved or not improved, but there is no doubt whatever that rising prices have been the rule throughout these four years.

Mr. Philip Bell: For 18 months.

Mr. Silverman: I say for four years.

Mr. Leslie Hale: Let the hon. and learned Member opposite look at the figures.

Mr. Silverman: The hon. and learned Gentleman thinks that it is only 18 months. I think that it is four years, but it does not matter to my argument. There is now, and has been for some time, a rising cost of living. Surely we are agreed about that.
There are only two ways in which we can deal with that, assuming that we are unable to bring the prices down. One is to increase wages and the other—

Mr. Gower: Rationing.

Mr. Silverman: If one tries to deal with the matter by increasing wages to meet the increasing cost of living, one may very well for the moment produce the effect which one wants. One may produce a rise in real wages. However, that would be a solution at the cost of inflation. That is what inflation is—rising prices, rising wages, rising wages send prices up again and then the wages have to go up again and one has the inflationary spiral which

it has been the objective of every Government since 1945 to prevent.
What has the Chancellor done? He has taken this£150 million or so, and, instead of using it without increasing wages to enable the lower income groups to meet the increased cost of living, he has given it to those who confessedly need it least. The important thing about Income Tax is not what one pays, but what one has left after paying. If one is talking about incentives, then incentives are best directed to increasing at the lower end, the working end, the actual purchasing power of those who admittedly have the lowest purchasing power and who are suffering most from the rising cost of living which is an admitted fact and the basic element in the situation.

Mr. P. Bell: Does the hon. Member then repudiate the reduction of Income Tax which was carried out by the last Administration when there were rising costs? Does he repudiate that, and say that it was a wicked act?

Mr. Silverman: There was more equitable distribution. Nobody denies that. The hon. and learned Member for Bolton, East (Mr. Philip Bell) can deny anything he chooses. If he chooses to say that two and two make seven and three-quarters, he is perfectly free to do so, but he will not persuade anybody. Those Income Tax concessions were distributed over a wider band of Income Tax payers than this one is. The right hon. Gentleman takes great credit for having released 2½million more people from liability to pay tax at all, but, on the average, they were paying only 9d. a week.

Mr. Ronald Bell: Surely the hon. Member realises that the only reason they are paying very little Income Tax is that my right hon. Friend, in two earlier Budgets, reduced what they were paying.

Mr. Silverman: We are dealing with the Budget before us. The hon. Gentleman is perfectly right if he says—and I know that it was implied in his intervention—that, on a fair view, one would have to fit any particular Budget into the whole pattern of financial development over a number of years, but, if the hon. Gentleman is to do that, he must not begin in 1951. He must begin in 1945 if he is going to talk about the effect of this


Budget in the whole pattern of post-war economics. If the hon. Gentleman does not do that, and I am sure he is not prepared to do it, at any rate this afternoon, we have to look at the kind of proposal in Clause 1, which we are now discussing.
5.0 p.m.
The hon. Gentleman asked why do we not vote against the Clause, but, if we voted against it and succeeded, the only result would be that the Chancellor would continue to collect from the taxpayers£150 million more revenue than he needs. So we have to take out that money as exceptionally budgeted for, because we cannot continue to raise it, and accept relief in the only way in which it is offered.
We are entitled to say how we would have preferred the remission to be done, and it is about that point that I want to say something. For years during the war, the Government compelled the people to lend them money which they promised to return. Surely it would have been more equitable to have made a proposal to make some provision for the return of some part of these post-war credits? Would it not have been more equitable to do that than to give£1 million to Unilever? Never mind who else did not do it, would it not have been better to do that now? [An HON. MEMBER: "Give way."] I am not going to give way again. We do not want to spend the whole day discussing Clause 1.
Take the question of the petrol tax. Would it not have been a considerable contribution to reducing the cost of living to have remitted that extra amount, or some part of it? It is one of the biggest burdens on working-class life.
The final point I want to make is about the Purchase Tax, particularly because of its effect on Lancashire, and perhaps I may be forgiven for devoting two more minutes to the effect of this Budget on Lancashire. Every Lancashire hon. Member, without exception, on both sides of the House, for four years, has been begging the right hon. Gentleman to remit the Purchase Tax on cotton piece goods. It would be some relief to a heavily burdened industry, and no one who knows anything about it, irrespective of party or politics, doubts that fact. What has the right hon. Gentleman done? He has

reduced half of it, at a cost this year of£2¼ million, and in a full year—

The Temporary Chairman (Sir Austin Hudson): Order. The hon. Member must not go into the details of the Purchase Tax. He is entitled to say that, instead of reducing Income Tax, the Chancellor should have done other things, but he cannot go into the merits of the Purchase Tax.

Mr. Silverman: I realise what the limitations are, Sir Austin, and I hope not to exceed them. I am only illustrating my argument that it would have been more beneficial—economically and industrially beneficial—to have done that than to have done what the right hon. Gentleman has done. I am not talking about the merits of the particular proposal in any detail.
The Chancellor gave a reason for not doing more. He said that if he had relieved it altogether, he could not have refrained from taking the tax off the finished article as well; that is to say, clothing, and that that would have cost him£42 million and that he could not afford it. But he could easily have afforded the£42 million if he had not preferred to give his remission in this wholly inequitable way. There has always been a dispute as to whether the Purchase Tax is inflationary or deflationary.

Mr. R. A. Butler: If this is to be a speech on the Purchase Tax, I shall be obliged to answer the argument, instead of on Thursday. I understand that a Prayer to annul the Order is on the Order Paper for discussion tomorrow.

Mr. Silverman: I have almost finished my point, and I am quite prepared to leave it at that. I only wish to show why, in my opinion, this would have been a very much better way of using money at the Chancellor's disposal, first, because it would have benefited industry substantially, and, secondly, it would have been less inequitable.
The Purchase Tax has long since ceased to be a tax which prevents people from consuming and has become a revenue tax. In so far as we rely on the Purchase Tax for revenue, we rely upon it to increase consumption and not to reduce it. Therefore, since it is now purely a revenue tax, the Chancellor could easily have remitted that revenue


and could have obtained it by better distribution of Income Tax reliefs. The result would have been beneficial all round, because by reducing the cost in that way, by cutting out a revenue tax, he would be reducing inflation and not increasing it.
I say that the more this proposal is examined the more clear does it become that the Government have deliberately used surplus resources at their disposal in an anti-social way, in ways that give benefit to the wrong people, and at the expense of those real reliefs in the economic situation, particularly in Lancashire, that were readily available to him.

Mr. R. A. Butler: We ought, I think, now to make some progress with Clause 1, because I understand that most of the detailed discussions are to take place on Clause 2. As this is a Committee stage, I hope that the Committee will excuse me if I do not make a very long speech, but simply answer the debate quite briefly.
The Committee would wish to congratulate the hon. Member for Stockport, South (Mr. H. Steward) upon an excellent maiden speech. He made a speech on productivity, and there is nothing more important than that. My hon. Friend brought a whiff of realism from Mersey-side and a considerable degree of experience in these important matters, and I think the Committee will wish, not only to hear him again in this and future Parliaments, but also that he should continue his work in his own area in increasing productivity there, and bringing to bear upon it the knowledge at his command.
We have also had a very interesting speech on the industrial aspect from my hon. Friend the Member for Louth (Mr. Osborne), upon which I will say a word or two in a moment. Whether I am able to answer the points put by the hon. Member for Nelson and Colne (Mr. S. Silverman) I am not so sure, but I hope to do so before the week is out. I sympathise with the hon. Gentleman because he represents a town which depends essentially on cotton, unlike some others in Lancashire, in which the industries are more mixed. I understand his anxiety, and if I do not allude to Lancashire today the hon. Gentleman will under-

stand that there is another day, and that I shall be referring to these matters then. That will be tomorrow actually, in reply to the debate on the Prayer about the Purchase Tax Order.
I would sum up the position about Clause 1 as follows. I had a very responsible task in trying to decide, in this Budget, how to distribute the proportion of the surplus which I thought it was legitimate to release back to the taxpayers, whose money it is, and I used the expression that I wanted something "classically pure and simple." I adopted the method which my predecessors in office—at any rate, some of the greatest of them—would have regarded as the most orthodox method, namely, a reduction of the standard rate.
I have in my room at No. 11 a picture of Mr. Gladstone, whose eyes are particularly penetrating, even more than those of the right hon. Gentleman opposite. I think the right hon. Gentleman probably knows the picture. As I gazed into those eyes, which I believe have alarmed more than one of my predecessors—

Mr. Hugh Gaitskell: They used to alarm a Leader of the Conservative Party.

Mr. Butler: Yes, and the picture was taken down from the wall. I have replaced the picture, and, gazing into those eyes, I came to the conclusion that this was the best thing to do this year, and that it was the simplest and the most effective way of helping the nation as a whole.
In making that decision, I was fully aware of the type of argument which would be used against a reduction of the standard rate of tax, even though it was accompanied by many other benefits which we shall be discussing under Clause 2. I knew that to give so many hundreds of thousands of pounds to large companies, or to remit so much taxation to Surtax payers or rich men would produce a most salacious and tantalising opportunity for retorts about the small amount released to the small men at the bottom end of the scale.
I was aware of the opportunity which would at once be seized, prior to the General Election, by the Opposition to attack me on this score. Because I had been through it in 1953, why did I want


to go through it again in 1955 and do it just before an Election? The answer is that my opinion still is that those in my position have to take decisions which are in the best interests of the economy, and as my hon. Friend the Economic Secretary said in his excellent speech, this move actually will prove—I think that my words will be shown to be correct as time goes by—to be the best in the interests of the economy as a whole.
Let us consider why it is good in the interests of the economy. It is good, first, because it will reduce the general weight of direct taxation, which weighs far too heavily at the present time on enterprise. My hon. Friend the Member for Louth gave examples from his own business, and other hon. Members who have spoken have indicated that that is correct. There is no doubt that the general weight of taxation on industrial enterprises and on persons at the present time is too great, and that we cannot hope to get the best out of a willing animal if we pile so much on its back. That is why I have attempted to reduce expenditure, and that is why I am very glad to be in the position to reduce the general weight of direct taxation.
The second point was that raised by the hon. Member for Stechford (Mr. Roy Jenkins) on the question of investment. I said in my speech last Friday that I had a dual policy of discipline and incentive. That dual policy is proving successful, and I think it will be proved to be successful as the months go by. But if we are to have discipline, which we have in our restriction on borrowing and in our restrictions on hire purchase and in other ways, we must have incentive to match.
The hon. Member for Stechford, as usual, made a point which was quite reasonable in saying that the last reduction in Income Tax in 1953 did not immediately result in an increase in investment. He doubts, therefore, whether this method this time will be as effective as the proposal to introduce the investment allowance, in which I indulged in the previous Budget. The answer to that can be given—I speak from memory, but one knows these documents so well now—from Table 27 of the Economic Survey, dealing with the metal goods industries. If one looks at the table on investment, the answer is that when the right hon. Member for Leeds, South (Mr. Gaitskell)

took off the initial allowance and introduced other measures to reduce investment in the private sector and to push the whole of the metal goods investment, for example, into defence, he was doing something which was legitimately defensible. But it meant that when I succeeded to my office there was a distinct lag in investment in ordinary manufacturing industry, which had been deliberately put into defence.
What the British economy has now done—speaking quite apart from party or from either side of the Committee, it is really very creditable—is to swallow the defence programme, which the right hon. Member for Leeds, South had so much to fear when he was in office. We have even swallowed it at a slightly larger figure, and we have also managed to increase our national product and to increase production as well. I believe that that process can be continued only if we give this further incentive through the reduction of direct taxation.
The answer to the hon. Member for Stechford is that we are now seeing the effect of the institution of the investment allowance instead of the initial allowance, and in the coming year and years we shall see the effect of the 1953 Budget, the effect of the introduction of the investment allowance, and the effect of the present Budget. Therefore, we shall not only see increased production—or, rather, maintained production; it is no good exaggerating one's words—but we shall also see the improvement in investment which we all so much want to see.
5.15 p.m.
The next point which I have to answer in the debate is whether we helped enough people in introducing the Income Tax change. I gave an answer yesterday in which I referred hon. Members to the "National Income Blue Book," which showed that there were some 25·3 million people with incomes; that is, counting husband and wife as one, which is a quite legitimate thing to do, at any rate from the Income Tax point of view. Looking to 1955–56, the calculations are that 17½million people will be paying Income Tax. Therefore, there are only about 7¾ million people who will be left out of these benefits, taking into account the 2,400,000 who have been exempted altogether. Of the 7¾ million people, 4 million will benefit from the increases


in National Insurance pensions which are being introduced. This means that all except about 3¾million people are affected one way or another by the Government's Measures in the general move that we are making.

Mr. Douglas Jay: The right hon. Gentleman told us that 2,400,000 people would be exempted by the Budget from paying Income Tax. Does that take account of the rise in wages and salaries that is going on, or is it merely the number who would be exempted if there were no rise?

Mr. Butler: It is taking account of the rise. That accounts for the bigger figure.

Mr. Jay: It is the net figure?

Mr. Butler: It is the net figure, yes—so I understand. If there is any mistake in my answer, I will see that it is corrected during the afternoon.
That illustrates to hon. Members that it is not the case that we are not trying to help the country as a whole. It is surprising how many families and ordinary incomes are helped in some way or another.
It has been rightly said—the hon. Member for Nelson and Colne said it—that some of the reductions are small. I said that myself. Whether they are small or not, all I can do is to take off the tax. If one's tax is small, I cannot be expected to increase it and then to take it off. I can only take it off as it stands.
I gave another interesting figure yesterday in answer to the right hon. Member for Battersea, North (Mr. Jay). He asked how many people receiving less than£10 a week had benefited, and by what amount. I said that in this Budget, the figure was about£19 million. But if one examines what has happened over the Budgets of 1952, 1953 and 1955, it will be found that families who have under£10 a week have profited to the extent of£116 million as a result of the reductions that I have made in those three Budgets. That is a reduction of 50 per cent. in the tax of such people.
The large numbers of people who are affected, the large numbers who have been excluded and the considerable benefit over these years to families of that type, who are the smallest income groups, illustrate that no other measure would have

had as wide and sweeping a scope. No other measure would have done as much for the economy or have been so appropriate for this year as the one which I have suggested.
The hon. Member for Nelson and Colne said that I was trying to buy the Conservative Party—

Mr. S. Silverman: No.

Mr. Butler: Or it was suggested by some hon. Members. I am glad that the hon. Member so quickly repudiates that idea.

Mr. Silverman: The right hon. Gentleman will remember that I acquitted him of so unbusinesslike a proposition of buying something of so little worth at such a price.

Mr. Butler: My own feeling is that the statement that the hon. Member so gallantly repudiates is on a par with that made by his right hon. Friend the Member for Huyton (Mr. H. Wilson), who suggested that our motives were governed by whether the mill owners in Lancashire contributed to the Conservative Party funds. These accusations are worth reading out only to show how worthless they are.
The position as we see it is that we are determined to make the British economy so strong that we can carry the social service and defence burdens into future generations. That is really the answer to the only last point which I want to answer, which was made by the hon. and learned Member for Kettering (Mr. Mitchison) and the hon. Member for Stechford, who asked for our view about the distribution of the national wealth. We naturally take the view that undue, unfair and disparate wealth is undesirable in a modern social State. Not one of us on this side of the Committee, I am sure, wants to see the population of this country divided by great differences of wealth. That could not lead to a happy or a socially decent condition. We certainly feel that.
I have been accused of giving money to companies. I have not given money to companies. I have restored a small portion of the tax that I take from them. The reason why I believe that a relief of tax for companies is a good thing is that I am certain that it gives managements and men an opportunity of thriving


and of a keener edge on their competition in the world market.
I further feel, and have myself certainly found in the pubs and clubs and open-air greens and other places where we are likely to be for the next six weeks meeting our constituents, that the working population—and this is remarkably so—are not keen to see either big institutions which give employment destroyed or even, in some cases, estates destroyed. I think it is as well to acknowledge that. The reason is that they are sources of employment, and if their standards are good, they are good in the British tradition.
It is not so much the fact of having people with more money that is wrong. What is wrong is when the people with more money have the wrong standards. If the right standards are maintained in business and in private life, in small businesses or in great, if the main standard is the social welfare of the people, if the standard is to maintain full employment and to look after the working people, to give them the best we can, and, if possible, to let them share in the wealth of the companies in some way or another, we feel that we are carrying out a philosophy which is right and good. It is on that philosophy that this Budget is based.
I am as keen as any member of this Committee to help those socially depressed or in need. We have tried to do that. It would not be in order for me to discuss that now. I am willing always to go forward in our social and education policy and in other ways to make things better for our people, but we cannot do that if the economy is not strong, and our economy will not be strong unless it is able to compete, and it will not be able to compete unless the burden is lightened. That is my main objective in making this proposal.

Mr. Gaitskell: I must apologise for the state of my voice. I have a suspicion that I have caught the infection from the Lord Privy Seal. I used to think and say that the intimate character of this place was one of its great attractions, but I am not so sure that I was right after all, if I have to catch laryngitis from the right hon. Gentleman. However, at least the Committee will be spared a long speech

or many interventions from me in this debate.
I agree with the Chancellor that we should now bring the discussion on Clause 1 to a close, not because it is not an important Clause but because we want to get on to some of our Amendments to Clause 2 which express more precisely what we think ought to be done. I should, however, like briefly to touch on some of the points which the Chancellor and others have mentioned. I do not propose to say anything about personal incomes because it will be possible and quite appropriate to discuss these on Clause 2. I shall confine my remarks to the question of the distribution of the Income Tax concessions to the companies.
Before coming to that, however, I should like to press the Chancellor once again on a point which my right hon. Friend the Member for Battersea, North (Mr. Jay) raised in an interjection about the numbers of persons exempted from Income Tax as a result of this Budget, because I scarcely think that, and I shall be surprised if, the reply which the Chancellor gave was correct. It would mean that the numbers would be dropping much faster than one would expect. Perhaps he will ascertain the answer. Perhaps he is already ascertaining what exactly the position is, and will give us a reply, not necessarily immediately, but at some time during our debates.
The Chancellor has rebuked me, not today but in his winding-up speech last Friday, for what I said about companies in my speech during the Budget debate. I have looked up my speech to see what it was I said that could have offended him so much. The only thing I can find I said about companies was that they were the Chancellor's favourite children. I do not know what was offensive about that. Is it that the Chancellor dislikes those children? Or is it that the companies dislike the parent? I do not know, but I should have thought from the relations that appear to exist, which are very intimate in this case, that both the children and the parent would have been quite happy about the terminology which I used.
There is no doubt at all as far as the facts go that the companies have benefited more than any other section of the community from the series of tax concessions which the Chancellor has given.
To do him justice he does not deny that. What he says is, "That is the right thing to do. That is what I believe in."
I would add one word on the most remarkable argument which he has brought forward today, saying he was so mesmerised by Mr. Gladstone's portrait that he thought he ought to do the same thing as Mr. Gladstone did. There is nothing very surprising about that because Sir Stafford Northcote quailed beneath the fierce eyes of Mr. Gladstone, and he was the Leader of the Conservative Opposition after Disraeli. He quailed beneath the ferocity of Mr. Gladstone's glare from the Treasury Bench, and I suppose it is natural that the Chancellor, like his Conservative predecessor, should feel a little alarmed. I think it was wise to take the portrait down, but it was not so wise to follow the budgetary example, because I would remind the Chancellor that a few months after Mr. Gladstone made that reduction in Income Tax there was a major financial crisis.
For the rest, the Chancellor's argument is a very general one, that somehow or other giving this money to the companies—the Chancellor used the phrase "giving away money"—is right, is good, is going to help the country, is going to make the economy sound, and is all the other platitudinous things which we have heard. I do not think they are very convincing.
I agree with my hon. Friend the Member for Stechford (Mr. Roy Jenkins) that if the Chancellor was interested in investment, as we all are in this Committee, then undoubtedly the right thing to do was to give incentives to investment as he did last year, by investment allowances. We supported him on that occasion. Merely to allow companies to retain a larger proportion of their profits certainly carries with it not the slightest guarantee that there will be any increase in investment whatever. There is, therefore, no special inducement in that direction.
It may be argued that they will be able to retain physical possession of a larger amount of money in undistributed profits than otherwise would have been the case. If there really were any evidence to show that investment at present is held back by a shortage of funds in the hands of companies, there might be something to be said for it, but, of course, that evidence

is not there. On the contrary, if one examines the Economic Survey one finds that year after year the total of undistributed profits—I am not saying that they are all liquid—exceeds the amount of investment, and the right hon. Gentleman really cannot justify any kind of argument that companies keen to invest except for taxation will now have the money to do so, whereas they did not have it before.
All this is difficult to reconcile with the Chancellor's monetary policy, which he himself admits must be designed in the last resort to check investment. All it amounts to, if anything at all, is that an established company is going to find it easier to invest than a new company which has not large undistributed profits, which is, I should have thought, the sort of company, we want to help.
I could have understood if the Chancellor had given any kind of differential in favour of the saving of undistributed as against distributed profits, but of course he has not done anything of the kind.

Mr. R. A. Butler: I did consider that very seriously, but it has to be remembered that in the case of undistributed profits the benefit accrues only after a year—it takes a year to accrue. I did not think that that would be immediate enough for the economy.

Mr. Gaitskell: I should not have thought that the fact that there was delay was a sufficient argument. That, of course, will always be an argument every year, and anyone would have to face it in any year in which he was considering a Budget.
I listened very carefully to the hon. Member for Louth (Mr. Osborne) and the serious case he put forward in favour of the companies. I found his argument about dividends a little confused, because he was at pains to point out how difficult it was for companies not to pay increased dividends because if they refrained from doing so somebody came along and bid up the shares—there was a take-over bid. I think that there is a lot in what he says, and that that will happen.
5.30 p.m.
In the course of last year, the total amount of the remission of taxation to companies amounted to£80 million, which was exactly the figure of the increase in dividends. We believe that


there is a connection between the two, and that that is what will happen. In any case, there is bound in the long run to be substantial ultimate gain to shareholders in the increased value of then-shares, in the capital gain still remaining untaxed.
We take the view, therefore, that this remission of taxation to companies, on which I am concentrating at the moment in order to save time, is not justified on the scale on which it is now being carried through. It does not mean that we are not appreciative of the vital importance of the private sector, but that does not lead to the conclusion that every tax concession to companies must be better than if the money were given somewhere else. Quite frankly, we are fully convinced that the Chancellor's proposal will not have any of the benefits on the economy which the Chancellor suggests, and we are satisfied, from the point of view of the effect of the proposal, that it is totally unjustified.

Sir Robert Boothby: May I ask the right hon. Gentleman one question? He indicated just now in a disparaging sense that it would be a very bad thing if anything were done for the benefit of shareholders. How, if he holds that view, can he ever expect an increase in industrial investment in this country?

Mr. Gaitskell: Once again the hon. Gentleman is drawing a conclusion from what I said which is not justified. We appreciate that there must be some return on capital, but we believe that in the last few years the relative share which shareholders have received has been too great in relation to what other people have had, and we think that this Budget is the crowning example of that.
Of course, like everything else, it is a matter of degree, but we feel that it has gone much too far, and although we shall not vote against this Clause, because it would be open to misunderstanding, we shall, I hope, put forward our point of view on subsequent Amendments. Nevertheless, we register our strong disagreement with the line that the Chancellor has taken in this Budget.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 2.—;(ALTERATIONS IN PERSONAL RELIEFS.)

Mr. Roy Jenkins: I beg to move, in page 2, line 31, at the end to insert:
Provided that this subsection shall not apply to a claimant who is chargeable in the year of assessment to income tax at any rate higher than the standard rate.
The effect of the Amendment would be to exclude from the benefits of the increased single or married allowances those who are within the Surtax rate. They would continue to enjoy the increased child allowance, but a single man would not get the increase from£110 to£140 under the single person's allowance, and a married man without children would not get the increase from£190 to£240 in the married man's allowance.
I have no doubt that this Amendment will be described, in the words of the Chancellor's famous interjection of last Thursday, as the "most blatant class-war stuff." It is not that, and perhaps I may begin by explaining why, for two reasons, it is not that. We had another Amendment down on the Order Paper which, under the very restrictive terms of the Budget Resolution, was not in order, but which will, no doubt, have attracted the attention of some hon. Members of the Committee. That Amendment proposed increasing the child allowance, not to the£100 at which the Chancellor puts it, but to£120, and the Amendment would have applied to Surtax payers as well as to the whole range of other Income Tax payers.
The result was two Amendments, this Amendment which I am now moving and the one which was on the Order Paper, but which we are not able to discuss today. Had the two Amendments been taken together, their result would have been that anyone who had more than two children would have been better off under our suggested arrangement than under the Chancellor's Budget proposals. To that extent, our proposals were in line with the broad recommendations of the Royal Commission on Taxation.
We wish to improve the position of the man with family responsibilities, whether he be in the Surtax range or not. We also take the view that, if one says that the Surtax man with a substantial number of children should get an improvement in his allowance, that improvement should


be given, not at the expense of people much less well off than himself, but at the expense of single or married Surtax payers without children.
In other words, there should be a sort of redistribution within the same range of income, but any improvement in the position of the Surtax payer with a number of children should not be brought about at the expense of people, either with or without children, who are a great deal worse off than he.
Had that been done, the position of Surtax payers would, as I say, have been somewhat improved. It is our view that that should be done by a redistribution within an income group and not at the expense of people very much worse off who will be paying 1s. a week extra in National Insurance contributions as part of the genera] financial arrangements of this Finance Bill.
There is a second reason—there is no class-war stuff about this Amendment—which is that, if it were accepted, the Surtax payer, particularly the very big one, would still be very much better off under this Budget than he was before. It would merely, to some smaller extent, moderate the rate of improvement which he would receive as a result of the cut in the standard rate of Income Tax which, of course, will go on independently of this Amendment, and which by its nature benefits far more those in the upper ranges than those in the lower ranges.
Therefore, the effect of the Amendment is not to penalise the Surtax payer as compared with other groups of taxpayers, but somewhat to moderate the extent of the advantage which he will get. I will illustrate this point by giving a few examples. Let us take, first, the case of a single man with an earned income of£2,500 a year. As far as I can see from the tables with which we have been provided, under the Finance Bill as it stands at present such an individual would be about£39 a year better off. If our Amendment were carried, he would still be about£24 a year better off, and would still get twelve times as much out of the Budget as would the average single wage earner. I am giving the illustration on the basis of single individuals earning the average wage over the whole country.
As another example, let us take a married man with no children with an

earned income of£4,000 a year. Under the present arrangement, he would be£77 better off and under our arrangement he would be£45 better off—still 10 times better off than the comparable married average wage earner. Again, take the example of a married man with no children earning£10,000 a year. I am taking the example of a man with no children because if there were children he would, under the provisions of our other Amendment to which I have referred, gain a compensating benefit. Such a man would be£229 better off under the Finance Bill as it stands, whereas, under our Amendment, he would be£89 better off, still getting 40 times as much benefit out of the Budget as the average wage earner.
My last example is that of a married man with no children, with an income of£50,000 a year, and here, instead of taking it as earned income, I have taken it as unearned. That may strike some hon. Members as unreasonable, but, of course, it is a fact that the tables in the Report of the Commissioners of Inland Revenue make it clear that the higher up the income scale one goes, the greater the chance that income will be unearned, the reason being that when one gets into the really high figures the unearned proportion becomes very large indeed.
Perhaps I might also say in parenthesis that when we on this side of the Committee talk about examples of people receiving incomes of£50,000 a year or whatever may be a high income, hon. Members opposite always take the view that these are very unrealistic examples which one should not talk about at all. But when hon. Members opposite wish to talk about the crippling, disincentive effects of direct taxation they always talk about the combined rate of Income Tax and Surtax at 18s. 6d. in the£as though this were the sum that everyone paid on an income of over£2,000 a year. Therefore, it is not unreasonable for us, in one out of four examples, to refer to the people who actually pay the rate of tax about which hon. Members opposite are always talking.
To revert to the details of the examples of a married man without any children having an unearned income of£50,000 a year, as the Bill stands he gets an advantage of£1,240, whereas under our Amendment he would get an advantage


of£1,190. In other words, he would still be getting 240 times more than the average wage earner is getting out of the Budget. So I say that this Amendment of ours, although moderating the extension of the advantages which Surtax payers who are single or who are married without any children will get, is not a vindictive Amendment, because it still leaves them very substantial remissions of taxation.
We are frequently asked to consider the plight of the really big Surtax payer. As I hear remarks of that sort, I always think that there is one worse fate than being a really big Surtax payer and that is not being a really big Surtax payer. The Committee should bear that in mind in considering the economic burdens which these people, with whom we are all extremely sympathetic, have to pay. I think it should be recollected—and I very much doubt whether the Treasury Bench would seriously deny this—when talking of people with big unearned incomes necessarily flowing from the possession of large sums of capital, that there are opportunities to those people which are not available either to those with big incomes and no capital or to those with small incomes and very limited capital, to make capital gains which do not attract tax at all. From that point of view they are better off than the generality of individuals, and that should be borne in mind in discussing the remissions to which they are entitled and which they will get out of this Finance Bill.
This is not, I repeat, a vindictive Amendment, but it is designed to express our sense of the excessive nature of the concessions which have been given to a limited number of individuals under this Finance Bill, not because we do not wish the concessions to be made, but because we believe that there is a whole range of claims affecting individuals through indirect taxation which should have been met to as great an extent as possible before the Chancellor went out of his way to give these very large remissions of taxation to a very limited number of people who are by no means in the greatest need of such remissions.

5.45 p.m.

Mr. H. Brooke: This Amendment is a shortened version of one that was on the Order Paper up till yesterday, and it certainly is an improvement because

the longer version contains some additional words which, as I understand them, would have excluded the Surtax payer from the benefit even of the existing personal allowances. That would have been out of order, and I understand that that is not what the hon. Member for Stechford (Mr. Roy Jenkins) is desirous of incorporating in the Bill.
The hon. Member has most skilfully combined the Amendment which he is now moving with certain other Amendments on the Order Paper which he was not able to move, and he will appreciate that all I can do is to point out the effects of the Amendment as it stands. It is hard for me to give any calculations to the Committee to show what this Amendment might do if certain other Amendments, which we are debarred from discussing, were to be incorporated in the Bill. I must admit that I have found it hard to follow some of the figures which he gave, and I was not quite sure to what extent they were founded on this Amendment alone or this Amendment in conjunction with other Amendments which are out of order.

Mr. Roy Jenkins: It may not make the figures any easier to follow, but I must say they were founded solely on this Amendment. I applied them only to single persons and married persons with no children because I had the other Amendment in mind, but it made no difference to the figures as such, which were solely founded on this Amendment.

Mr. Brooke: The hon. Member and I are in agreement that in this matter it is better to talk in terms of a single person or a childless couple. We shall only complicate the discussion if we bring in the children, because of the rates of child allowance.
What I must put to the Committee once again is that the proposal in subsection (3) has always been linked in the mind of my right hon. Friend with the proposal in the Bill to reduce the lowest band from£100 to£60. I think I can only make clear the case which my right hon. Friend is desirous that the Committee should grasp by stressing that he has been working to find a means of fulfilling the recommendation of the Royal Commission on Taxation that large numbers of people paying small amounts of tax with quite small incomes


should, if possible, be relieved from tax altogether and should be relieved in such a way that the relief extended to them should not spread up through all the higher levels of income.
The Royal Commission made one suggestion that would have involved certain administrative difficulties, and my right hon. Friend has presented to the House another device. That device is to bring into force these increased personal allowances of£20 for the single man and£30 for the married couple, but to stop the benefit of that from going right through the higher incomes by reducing the band chargeable at the lowest rate.
I want to show to the Committee how, in effect, he has combined those two in such a way—I am not at all sure that the hon. Member has appreciated this—as to ensure that anybody who is paying tax at the standard rate on part of his income—and that, of course, includes all Surtax payers—will derive no perceptible benefit from these two changes taken in conjunction.
Subsection (3) will give the following advantages to Surtax payers. To the single man it will give an advantage of tax at the rate of 8s. 6d. in the£on£20, that is to say, a total of£8 10s.; to the married couple it will give an advantage of£12 15s., that is to say, 8s. 6d. in the£on£30. That is the whole amount that any Surtax payer will gain. But we now have to look—I have stressed that the two are linked together—at the effect on the higher income levels of the provision whereby the lowest of the reduced rate bands is cut down from£100 to£60, because that, in effect, claws back from the Surtax payer any addition which he would gain from subsection (3).
If the Committee will study it, they will find that the contraction of the smallest of the reduced rate bands by£40 means that, under this Budget, the Surtax payer will on£40 be paying tax at 8s. 6d. in the£instead of at 2s. 3d. in the£. That is to say, he will be paying additional tax on£40 at the rate of 6s. 3d. That will work out at£12 10s.
Now we go back to the figures I have just mentioned. The married couple will have received a total benefit of£12 15s. from the increased personal allowances, and£12 10s. of that—all except 5s.—is clawed back by the provision on page 3. The single man is less fortunate. He will

have gained£8 10s. from the increased personal allowance, but he will have no less than£12 10s. clawed back, so that he will be£4 worse off as the combined result of this operation.

Mr. Hale: I may be wrong, and I apologise if I am, but the hon. Gentleman is talking as if all this applies to the Surtax payer only. The Amendment of my hon. Friend the Member for Stechford (Mr. Roy Jenkins) applies to the Surtax payer only. Surely the clawing back applies to everybody earning£1,000 or less?

Mr. Brooke: Yes. I am sorry if I confused things for the hon. Member for Oldham, West (Mr. Hale), but I was addressing myself to the Amendment which is confined to the Surtax payer. I thought I had indicated in passing in the earlier part of my speech that this would apply to anybody who was paying tax on a sufficient slice of his income at the standard rate.

Mr. Jay: I congratulate the Financial Secretary on remembering all the figures, but can he tell us what is the point of having this most ingenious device to prevent the Surtax payer gaining from part of the change, and then superimposing on the whole thing a reduction in the standard rate which gives it back to him again?

Mr. Brooke: We have discussed the reduction in the standard rate on Clause 1, which we have now passed. Here, we are examining personal allowances. What we are studying is the particular method that has been chosen by my right hon. Friend, which I submit is a wiser method than the Royal Commission recommended, to carry out a recommendation which, I should have thought, would have commended itself to both sides of the Committee.
It really is not reasonable to split up Clause 2 in such a way as to say that one can take subsection (3) separately from subsection (7), and so forth, when, in fact, they have been specifically designed to go together. I hope, therefore, that I have convinced the Committee that subsection (3) is not here to give something extra away to the Surtax payer, but is really part of a skilfully designed piece of machinery to ensure that those people who have the benefit


of higher incomes do not derive any gain from the advantage given in subsection (3) to the small taxpayers.

Mr. Gaitskell: I must say that I did not think the Financial Secretary met my hon. Friend's arguments at all adequately. What we are trying to do in this Amendment is to modify what we regard as a very unfair distribution of tax remissions in this Budget, and we are proposing therefore, within the very narrow limits set by the rules of order, to take away from the Surtax payers the gain that they otherwise would have from the increased personal allowances.
Frankly, I do not think it is an adequate answer to my hon. Friend to refer to this very intricate affair of the narrowing of the band from£100 to£60 and the reason that was done. It does not meet our point at all. The fact remains that out of this Budget as it now stands, the Surtax payers do extraordinarily well.
I would ask hon. Members to look at the table on column 740 of yesterday's OFFICIAL REPORT. I do not apologise for quoting these figures because they are very remarkable. It will be seen that as a result of these Income Tax changes, 8,350,000 people get£19 million in tax remission—somewhat less than 1s. a week—whereas 325,000 Surtax payers, with incomes of£2,000 and over, get£25 million—about 30s. a week. In other words, they each of them get thirty times as much as the vastly greater number of taxpayers on incomes of£10 a week or rather less.
Indeed, if one has any doubts about this general argument, I suggest one turns to the table set out in the written answers to Questions on columns 41 and 42 of yesterday's OFFICIAL REPORT, which shows in the clearest possible way the enormously greater advantages which,

under the three Budgets in which the Income Tax was changed, have gone once again to the wealthier people. The maximum amounts which persons at different levels of incomes have obtained in these three Budgets are as follows: The married couple with two children on£500 a year have an advantage of£130 in total. That is the gain they have from these three Budgets. The£5,000 a year man has a gain of£285; the£10,000 a year man has a gain of£535; and the£20,000 a year man has a gain of£1,350.

The Financial Secretary the other day produced some interesting percentage figures. I suggest that the percentage effect on the net income of the taxpayer is something which is extremely important because that indicates just how much better off he is in percentage terms as a result of these Budgets. It will be seen that the wealthiest person in this table—the£20,000 a year man—as a result of these three Budgets had an increase of about 25 per cent. in his net income; the£10,000 a year man a gain of about 15 per cent. of his net income; the£5,000 a year man a gain of about 11 per cent.; and the£500 a year man only 2½per cent.

All these are only alternative ways of showing the same essential, which is that as a result of the right hon. Gentleman's policies the wealthier section of the population have come off overwhelmingly best. This Amendment is a modest attempt to do something at this late stage to modify the latest of the right hon. Gentleman's proposals. I am extremely sorry that the Financial Secretary is unable to make us any kind of concession to help us or to give any adequate reply. In the circumstances, I suggest to my hon. Friends that we should divide the Committee.

Question put, That those words be there inserted:—

The Committee divided: Ayes, 208, Noes, 236.

Division No. 61.]
AYES
[5.59 p.m.


Albu, A. H.
Blenkinsop, A.
Callaghan, L. J.


Allen, Arthur (Bosworth)
Blyton, W. R.
Champion, A. J.


Anderson, Frank (Whitehaven)
Boardman, H.
Chapman, W. D.


Attlee, Rt. Hon. C. R.
Bottomley, Rt. Hon. A. G.
Chetwynd, G. R.


Awbery, S. S.
Bowden, H. W.
Clunie, J


Bacon, Miss Alice
Braddook, Mrs, Elizabeth
Coldrick, W.


Barnes, Rt. Hon. A. J.
Brockway, A. F.
Collick, P. H.


Bartley, P.
Brook, Dryden (Halifax)
Collins, V. J.


Bellenger, Rt. Hon. F. J.
Broughton, Dr. A. D. D.
Corbet, Mrs. Freda


Benn, Hon. Wedgwood
Brown, Rt. Hon. George (Belper)
Cove, W. G.


Benson, G.
Brown, Thomas (Ince)
Craddock, George (Bradford, S.)


Bevan, Rt. Hon. A. (Ebbw Vale)
Burke, W. A.
Crosland, C. A. R.


Blackburn, F.
Butler, Herbert (Hackney, S.)
Cullen, Mrs. A.




Dalton, Rt. Hon. H.
Jones, Jack (Rotherham)
Robinson, Kenneth (St. Pancras, N.)


Davies, Ernest (Enfield, E.)
Jones, James (Wrexham)
Rogers, George (Kensington, N.)


Delargy, H. J.
Jones, T. W. (Merioneth)
Ross, William


Dodds, N. N.
Kenyon, C.
Shackleton, E. A. A.


Driberg, T. E. N.
Key, Rt. Hon. C. W.
Shinwell, Rt. Hon. E.


Ede, Rt. Hon. J. C.
King, Dr. H. M.
Short, E. W.


Edwards, Rt. Hon. John (Brighouse)
Kinley, J.
Silverman, Julius (Erdington)


Edwards, Rt. Hon. Ness (Caerphilly)
Lee, Frederick (Newton)
Silverman, Sydney (Nelson)


Edwards, W. J. (Stepney)
Lee, Miss Jennie (Cannock)
Simmons, C. J. (Brierley Hill)


Evans, Albert (Islington, S. W.)
Lewis, Arthur
Skeffington, A. M.


Evans, Edward (Lowestoft)
MacColl, J. E.
Slater, Mrs. H. (Stoke-on-Trent)


Fernyhough, E.
McGhee, H. G.
Slater, J. (Durham, Sedgefield)


Fienburgh, W.
McInnes, J.
Smith, Ellis (Stoke, S.)


Finch, H. J.
McKay, John (Wallsend)
Smith, Norman (Nottingham, S.)


Fletcher, Eric (Islington, E.)
McLeavy, F.
Snow, J. W.


Follick, M.
MacPherson, Malcolm (Stirling)
Sorensen, R. W.


Foot, M. M.
Mallalieu, J. P. W. (Huddersfd, E.)
Soskice, Rt. Hon. Sir Frank


Forman, J. C.
Mann, Mrs. Jean
Steele, T.


Fraser, Thomas (Hamilton)
Manuel, A. C.
Stewart, Michael (Fulham, E.)


Freeman, Peter (Newport)
Marquand, Rt. Hon. H. A.
Stokes, Rt. Hon. R. R.


Gaitskell, Rt. Hon. H. T. N.
Mellish, R. J.
Strachey, Rt. Hon. J.


Gibson, C. W.
Mitchison, G. R.
Stross, Dr. Barnett


Glanville, James
Monslow, W.
Summerskill, Rt. Hon. E.


Gooch, E. G.
Moody, A. S.
Swingler, S. T.


Gordon Walker, Rt. Hon. P. C.
Morgan, Dr. H. B. W.
Sylvester, G. O.


Grenfell, Rt. Hon. D. R.
Morris, Percy (Swansea, W.)
Taylor, John (West Lothian)


Grey, C. F.
Morrison, Rt.Hn.Herbert (Lewis'm,S.)
Thomas, Ivor Owen (Wrekin)


Griffiths, David (Rother Valley)
Mort, D. L.
Turner-Samuels, M.


Griffiths, Rt. Hon. James (Llanelly)
Moyle, A.
Ungoed-Thomas, Sir Lynn


Hale, Leslie
Mulley, F. W.
Usborne, H. C.


Hall, John T. (Gateshead, W.)
Murray, J. D.
Viant, S. P.


Hamilton, W. W.
Oliver, G. H.
Warbey, W. N.


Hardy, E. A.
Orbach, M.
Watkins, T. E.


Hargreaves, A.
Oswald, T.
Webb, Rt. Hon. M. (Bradford, C.)


Harrison, J. (Nottingham, E.)
Owen, W. J.
Weitzman, D.


Hastings, S.
Paling, Rt. Hon. W. (Dearne Valley)
Wells, Percy (Faversham)


Hayman, F. H.
Paling, Will T. (Dewsbury)
Wells, William (Walsall)


Healey, Denis (Leeds, S.E.)
Palmer, A. M. F.
West, D. G.


Henderson, Rt. Hn. A. (Rwly Regis)
Pannell, Charles
Wheeldon, W. E.


Herbison, Miss M.
Pargiter, G. A.
White, Henry (Derbyshire, N.E.)


Hobson, C. R.
Parker, J.
Whiteley, Rt. Hon. W.


Holman, P.
Parkin, B. T.
Wigg, George


Holmes, Horace
Paton, J.
Williams, Rev. Llywelyn (Ab'tillery)


Houghton, Douglas
Pearson, A.
Williams, Ronald (Wigan)


Hudson, James (Ealing N.)
Peart, T. F.
Williams, Rt. Hon. T. (Don Valley)


Hughes, Emrys (S. Ayrshire)
Plummer, Sir Leslie
Williams, W. R. (Droylsden)


Hughes, Hector (Aberdeen, N.)
Popplewell, E.
Willis, E. G.


Hynd, H. (Accrington)
Price, J. T. (Westhoughton)
Wilson, Rt. Hon. Harold (Huyton)


Hynd, J. B. (Attercliffe)
Price, Philips (Gloucestershire, W.)
Winterbottom, Ian (Nottingham, C.)


Irving, W. J. (Wood Green)
Probert, A. R.
Winterbottom, Richard (Brightside)


Isaacs, Rt. Hon. G. A.
Proctor, W. T.
Woodburn, Rt. Hon. A.


Janner, B.
Pryde, D. J.
Yates, V. F.


Jay, Rt. Hon. D. P. T.
Rankin, John
Younger, Rt. Hon. K.


Jeger, George (Goole)
Reeves, J.



Jenkins, Roy (Stechford)
Reid, Thomas (Swindon)
TELLERS FOR THE AYES:


Johnson, James (Rugby)
Reid, William (Camlachie)
Mr. Wallace and


Jones, Rt. Hon. A. Creech
Rhodes, H.
Mr. Wilkins.


Jones, David (Hartlepool)
Roberts, Goronwy (Caernarvon)





NOES


Aitken, W. T.
Black, C. W.
Cooper, Sqn. Ldr. Albert


Alport, C. J. M.
Boothby, Sir Robert
Cooper-Key, E. M.


Amery, Julian (Preston, N.)
Bowen, E. R.
Craddock, Beresford (Spelthorne)


Amory, Rt. Hon. Heathcoat (Tiverton)
Boyle, Sir Edward
Crookshank, Capt. Rt. Hn. H. F. C.


Arbuthnot, John
Braine, B. R.
Crosthwaite-Eyre, Col. O. E.


Armstrong, C. W.
Braithwaite, Sir Albert (Harrow, W.)
Crouch, R. F.


Ashton, H. (Chelmsford)
Braithwaite, Sir Gurney
Darling, Sir William (Edinburgh, S.)


Assheton, Rt. Hn. R. (Blackburn,W.)
Bromley-Davenport, Lt.-Col. W. H.
Davidson, Viscountess


Baldock, Lt.-Cmdr. J. M.
Brooke, Henry (Hampstead)
Deedes, W. F.


Baldwin, A. E.
Browne, Jack (Govan)
Dodds-Parker A. D.


Banks, Col. C.
Buchan-Hepburn, Rt. Hon. P. G. T.
Donaldson, Cmdr. C. E. McA.


Barber, Anthony
Bullard, D. G.
Donner, Sir P. W.


Barlow, Sir John
Bullus, Wing Commander E. E.
Drayson, G. B.


Baxter, Sir Beverley
Burden, F. F. A.
Duncan, Capt. J. A. L.


Beach, Maj. Hicks
Butcher, Sir Herbert
Duthie, W. S.


Bell, Philip (Bolton, E.)
Butler, Rt. Hn. R. A. (Saffron Walden)
Eden, J. B. (Bournemouth, West)


Bell, Ronald (Bucks, S.)
Carr, Robert
Elliott, Rt. Hon. W. E.


Bennett, F. M. (Reading, N.)
Cary, Sir Robert
Errington, Sir Eric


Bennett, Sir William (Woodside)
Channon, H.
Fell A.


Bevins, J. R. (Toxteth)
Clarke, Col. Sir Ralph (E. Grinstead)
Finlay, Graeme


Birch, Rt. Hon. Nigel
Cole, Norman
Fisher, Nigel


Bishop, F. P.
Colegate, Sir Arthur
Fletcher-Cooke, C.







Fort, R.
Linstead, Sir H. N.
Remnant, Hon. P.


Foster, John
Llewellyn, D. T.
Renton, D. L. M.


Fraser, Hon. Hugh (Stone)
Lloyd, Maj. Sir Guy (Renfrew, E.)
Roberts, Peter (Heeley)


Fraser, Sir Ian (M'cmbe & Lonsdale)
Lloyd-George, Maj. Rt. Hon. G.
Robertson, Sir David


Galbraith, T. C. D. (Hillhead)
Lockwood, Lt.-Col. J. C.
Robinson, Sir Roland (Blackpool, S.)


Garner-Evans, E, H.
Longden, Gilbert
Robson-Brown, W.


Glover, D.
Low, Rt. Hon. A. R. W.
Rodgers, John (Sevenoaks)


Gomme-Duncan, Col. A.
Lucas, Sir Jooelyn (Portsmouth, S.)
Roper, Sir Harold


Gough, C. F. H.
Lucas, P. B. (Brentford)
Ropner, Col. Sir Leonard


Gower, H. R.
Lucas-Tooth, Sir Hugh
Russell, R. S.


Graham, Sir Fergus
McCorquodale, Rt. Hon. M. S.
Ryder, Capt. R. E. D.


Gresham Cooke, R.
McKibbin, A. J.
Savory, Prof. Sir Douglas


Grimston, Hon. John (St. Albans)
Mackie, J. H. (Galloway)
Schofield, Lt.-Col. W.


Grimston, Sir Robert (Westbury)
Maclay, Rt. Hon. John
Scott-Miller, Cmdr. R.


Hall, John (Wycombe)
McLean, Neil (Inverness)
Sharples, Maj. R. C.


Harris, Reader (Heston)
Macpherson, Niall (Dumfries)
Shepherd, William


Harrison, Col. J. H. (Eye)
Maitland, Cdr. J. F. W. (Horncastle)
Smithers, Peter (Winchester)


Harvey, Air Cdre. A. V. (Macclesfd)
Maitland, Patrick (Lanark)
Smyth, Brig, J. C. (Norwood)


Heald, Rt. Hon. Sir Lionel
Manningham-Buller, Rt. Hn. Sir R.
Snadden, W. McN.


Heath, Edward
Marlowe, A. A. H.
Spearman, A. C. M.


Higgs, J. M. C.
Marples, A. E.
Spens, Rt. Hn. Sir p. (K'ns'gt'n, S.)


Hill, Mrs. E. (Wythenshawe)
Marshall, Douglas (Bodmin)
Stevens, Geoffrey


Hill, John (S. Norfolk)
Maude, Angus
Steward, Harold (Stockport, S.)


Hinchingbrooke, Viscount
Maydon, Lt.-Comdr. S. L. C.
Steward, William (Woolwich, W.)


Hirst, Geoffrey
Medlicott, Sir Frank
Stewart, Henderson (Fife, E.)


Holland-Martin, c. J.
Mellor, Sir John
Stoddart-Scott, Col. M.


Hollis, M. C.
Milligan, Rt. Hon. W. R.
Storey, S.


Holt, A. F.
Molson, A. H. E.
Studholme, H. G.


Hope, Lord John
Moore, Sir Thomas
Summers, G. S. (Aylesbury)


Hopkinson, Rt. Hon. Henry
Mott-Radclyffe, C. E.
Sumner, W. D. M. (Orpington)


Hornsby-Smith, Miss M. P.
Nabarro, G. D. N.
Sutcliffe, Sir Harold


Horobin, Sir Ian
Neave, Airey
Teeling, W.


Horsbrugh, Rt. Hon. Florence
Nicholson, Godfrey (Farnham)
Thompson, Lt.-Cdr.R. (Croydon, W.)


Howard, Hon. Greville (St. Ives)
Nicolson, Nigel (Bournemouth, E.)
Thorneycroft, Rt. Hn. P. (M'nm'th)


Hudson, W. R. A. (Hull, N.)
Nield, Basil (Chester)
Thornton-Kemsley, C. N.


Hughes Hallett, Vice-Admiral J.
Noble, Comdr. A. H. P.
Touche, Sir Gordon


Hulbert, Wing Cmdr. N. J.
Nugent, G. R. H.
Turton, R. H.


Hurd, A. R.
Oakshott, H. D.
Vane, W. M. F.


Hutchison, Sir Ian Clark (E'b'gh,W.)
O'Neill, Hon. Phelim (Co. Antrim,N.)
Vaughan-Morgan, J. K.


Hutchison, James (Scotstoun)
Ormsby-Gore, Hon. W. D.
Wade, D. W.


Hyde, Lt.-Col. H. M.
Orr-Ewing, Charles Ian (Hendon, N.)
Wakefield, Edward (Derbyshire, W.)


Hylton-Foster, Sir H. B. H.
Osborne, C.
Wakefield, Sir Wavell (St. M'le'bne)


Jenkins, Robert (Dulwich)
Page, R. G.
Wall, Major Patrick


Jennings, Sir Roland
Peake, Rt. Hon. O.
Waterhouse, Capt. Rt. Hon. C.


Johnson, Eric (Blackley)
Perkins, Sir Robert
Webbe, Sir H. (L'nd'n & Westm'r)


Jones, A. (Hall Green)
Peto, Brig. C. H. M.
Wellwood, W.


Joynson-Hicks, Hon. L. W.
Peyton, J. W. W.
Williams, Rt. Hn. Charles (Torquay)


Kaberry, D.
Pickthorn, K. W. M.
Williams, Gerald (Tonbridge)


Kerby, Capt. H. B.
Pilkington, Capt. R. A.
Williams, Paul (Sunderland, S.)


Kerr, H. W.
Pitman, l. J.
Williams, R. Dudley (Exeter)


Lambert, Hon. G.
Powell, J. Enoch



Lambton, Viscount
Price, Henry (Lewisham, W.)
Wills, G.


Lancaster, Col. C. G.
Prior-Palmer, Brig. O. L.
Wilson, Geoffrey (Truro)


Langford-Holt, J. A.
Raikes, Sir Victor
Wood, Hon. R.


Leather, E. H. C.
Ramsden, J. E.
Woollam, John Victor


Legge-Bourke, Maj. E. A. H.
Rayner, Brig. R.



Legh, Hon. Peter (Petersfield)
Redmayne, M.
TELLERS FOR THE NOES:


Lindsay, Martin
Rees-Davies, W. R.
Sir Cedric Drewe and




Mr. Robert Allan.

The Chairman: The next Amendment which I shall call is that in the name of the right hon. Member for Leeds, South (Mr. Gaitskell) at the top of page 462 of the Order Paper, namely, in page 3, line 13, leave out "£60" and insert "£100."

Mr. Hugh Dalton: May I at this stage, Sir Charles, ask you which of the Amendments to Clause 2 it is intended to call? They cover a number of points which are connected and they all relate to Income Tax rates. It might be convenient to the Committee if you would tell us.

The Chairman: The nine Amendments which go with the Amendment I have selected are as follow:
In page 3, line 15, leave out "£60" and insert "£100"; in line 16, leave out "£60" and insert "£100"; in line 17, leave out "£210" and insert "£250"; in line 19, leave out "£210" and insert "£250"; in line 20, leave out "£210" and insert "£250"; in line 21, leave out "£360" and insert "£400"; in line 22, leave out "£210" and insert "£250"; in line 23, leave out "£360" and insert "£400"; and in line 24, leave out "£360" and insert "£400".

Mr. Dalton: That means that a large number of our Amendments will not be called, although we are having a very abbreviated Committee stage. Is it because you as Chairman are not selecting them, Sir Charles, or because they are out of order?

The Chairman: Those of which I gave a list just now are all consequential on the Amendment which has been called. If this Amendment is carried by the Committee the others will be called, but, if it is negatived, the others will fall.

Mr. Dalton: There are several groups of Amendments which, I understand, will not be called.

The Chairman: The Amendment in page 3, line 13, to leave out "£60" and to insert "£250," is outside the scope of the Bill. It is not a question of reducing charges, but of being outside the scope of the Bill.

Mr. Dalton: I want to know where we are. I am sure the Chancellor will agree that that is desirable. We are having a very abbreviated discussion on the Bill and all these Amendments relate to the proposed changes in the charges for Income Tax. All we are seeking to do by the whole of this group of Amendments is, not to increase the charges, but to give further tax remissions to certain groups of taxpayers and, in particular, by some of the Amendments, to put back the state of affairs as it was prior to the introduction of the Bill—to restore the status quo, for example, with regard to the first band in reduced Income Tax relief, and so on.
We are rather surprised that on the ground of order we are not to have an opportunity to debate some of these Amendments. They seem to fall into a broad group of improvements in the Income Tax arrangements by making certain relatively small, but none the less important, changes in the scheme for tax.

The Chairman: The scope of the Finance Bill is limited by the Resolutions on which it is founded.

Mr. Mitchison: As a rule, in a discussion on the Finance Bill one is allowed to put down and have discussed Amendments to increase reliefs. There are three Amendments on the first page of the Order Paper, none of which has been

selected, but which are simply of that character.

The Chairman: Perhaps I should answer that point now. Generally speaking, the last Resolution is a general alteration of the law, which makes that in order. We did not have that this year. That is why those Amendments are out of order and, for the same reason, the proposed new Clause, "Disability relief" is out of order.

Mr. Mitchison: Does that mean that even though Clause 2 deals with specific reliefs, we are not allowed to say that those reliefs are not enough? The Chancellor has passed on only 3d. of the reduced rate relief instead of the usual 6d. We have put down Amendments to do what has been done in previous cases—to pass on the 6d.
On that subject I found some observations made by the Chancellor, which I thought might be of assistance to the Committee. This was an occasion when there was a similar restricted Resolution on the Purchase Tax and the right hon. Gentleman objected to debating the matter in chunks. He said it was a very big constitutional question remaining unsolved and unanswered by the Government. The representatives of the people and the Committee were unable to discuss the tax. He went on to say—these are the words upon which I rely—that
It was an aggravation of this spirit which lost us the American Colonies.… "—[OFFICIAL REPORT, 19th April, 1950; Vol. 474, c. 157.]
I know that we have lost those Colonies, but we do not want to lose any more. It is an aggravation of that spirit that will lose the Government their position. We would not mind that, Sir Charles, but the other part of the question has serious implications.

The Chairman: I think that the hon. and learned Member for Kettering (Mr. Mitchison) is confusing two things. Generally speaking, hon. Members can move Amendments to reduce the charge, but on this occasion it is a question of scope. If hon. Members look at the Budget Resolutions which the Committee passed, and the House agreed to, they will see that they are very much restricted and that is why we are in this position. It is a question of scope, and not of increasing the charge. In reference to


the Purchase Tax, I imagine the hon. and learned Member was referring to the 1952 Budget—

Mr. Mitchison: Yes, Sir Charles.

The Chairman: That was under the Resolutio n dealing with that particular point.

Mr. Mitchison: With respect, I understand that what happened in 1952 was that there was a restrictive Resolution. There is an even more restrictive step being taken now to meet the almost invariable Resolution amending the law. The result is that the Chancellor is out-Heroding Herod. This is far worse than what he was protesting about on the former occasion, when he mentioned the American Colonies.

6.15 p.m.

Sir Frank Soskice: As I understood the Ruling you gave a few moments ago, Sir Charles, you proposed to allow a discussion, and have ruled that it is in order to allow a discussion, on what is described as the band—the band within the terms of which the reduced rate of Income Tax is charged. But as I understood your Ruling—perhaps I misunderstood it—

The Chairman: I never used the word "band."

Sir F. Soskice: I used the word "band" as an epithet to describe the group of Amendments which deals with the problem as to the limits within which the reduced rate of Income Tax is chargeable. That band is a limit above which one pays a higher rate and below which one pays a still lower rate. If we were not able to raise it on the Financial Resolution which has been passed we should like to be told, because that seems unfortunate. I understand that we are allowed to argue that the limit for the reduced rate should be what it was before this Bill was introduced—in other words, that it should be£100 and not£60. We want also to be able to argue that by way of further relief to Income Tax payers in the lower income groups, the limit for reduced rate should be increased to£250.
Surely I am right—I speak with great deference and subject to your Ruling, Sir Charles, of course—that this is

immediately germane and bound up in the question of what I have described as a band, that is, another limit which we seek to substitute for the limit at present in the Bill within which the reduced rate is to be charged. If we are entitled to argue that the limit should be£100 as before, we would not be infringing the rules of order if we said that it should not be£100 but£250. We would not be imposing an additional burden on the subject; on the contrary, we would be trying, in a very small, moderate measure, to relieve still more the burden on the lower income groups by seeking to extend the band within which the reduced rates shall be charged.

The Chairman: What I tried to make clear a moment ago is that the rates in the charge have nothing to do with it; it is a matter of scope. When these matters were laid down under the Budget Resolutions I did not invent the rules, but I have to carry them out. It is no good saying that an Amendment will reduce the charge if it is drawn in such a way that it will go beyond the scope and is out of order. I have called an Amendment; I do not know why there should be much complaint.

Sir F. Soskice: I want to make it perfectly clear, Sir Charles, that I was not in any sense questioning any Ruling you have given. That is the last thing I would desire to do. The only point is that you having pointed out that the Financial Resolution keeps us within very narrow limits, should we not be strictly within those limits if we limited our argument simply to the range within which the reduced rate is to be charged and do what we are anxious to do because we think this is an imperative measure of justice to the lower income groups of taxpayers? What we want to do is to say that the lower income rate should be chargeable up to£250 limit instead of up to only£100 limit.
We should be grateful if you would tell us whether the Resolution is so very tightly drawn that we cannot even go as far as that in trying to secure some measure of relief for the lower Income Tax payers.

The Chairman: I did not draw up the Resolution. I am here to carry it out to the best of my ability. The Amendments which I have detailed are in order, but


the others in the name of the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) are out of order because they are outside the scope of the Resolution. That is really all I can say about it.

Mr. Jay: You say, Sir Charles, that it is the Resolution which is the cause of the trouble. Do we understand, therefore, that the whole responsibility for this unprecedented restriction of debate rests not with you but with the Government?

The Chairman: I did not say that there was any trouble. I am not in the least troubled.

Mr. Jay: But the responsibility for the restriction which is causing trouble to us, at any rate, rests with the Government who drew the Resolution.

The Chairman: I do not know who causes trouble. I am here to carry out the rules.

Mr. Dalton: I hope, Sir Charles, that you do not think that we have pursued the point unduly. We were anxious to ascertain the position as interpreted by you. Having now heard that it is the fault of the Government's Resolution, which you have to carry out, which has brought us to the pass that at least half the Amendments designed to benefit the poorer sections of Income Tax payers are out of order—

The Chairman: The first Amendment which I have called is in order. If it is negatived, the second will be out of order.

Mr. Dalton: None the less, you have told us that a large number of the Amendments which we have put down as a group of proposals which hang together and which are designed cumulatively to be of benefit to those whom the Chancellor has neglected to a great extent are out of order. If they are now to be ruled out of order—and we accept your Ruling, of course—then a situation has been reached in which the Committee should express an opinion. The opinion which I hope the Committee will express is that this is a most outrageous example of Parliamentary dictatorship.
The Bill is short and trivial enough in all conscience. There is little enough in it. Whereas, in other years, we have had a long period of debate, and sometimes

all-night sittings on considerable proposals, we find that we are deprived even of the opportunity of moving these Amendments which we have put on the Order Paper.
In view of the constitutional outrage that has been committed, and so that people may understand what is being done on the eve of the appeal for their votes, I beg to move, "That the Chairman do report Progress and ask leave to sit again."

The Chairman: I cannot accept that Motion. [HON. MEMBERS: "Why not?"] I will tell you in a moment. The complaint is that the Finance Bill is drawn in accordance with the Budget Resolutions. The Budget Resolutions were passed in Committee and agreed to by the House, and it was quite obvious that anybody reading them would see that there would be a short Finance Bill. I was not in the least surprised; in fact, I was surprised that I was able to find so many Amendments in order.

Mr. Hale: I am in rather a difficulty. The right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) is the only person I have heard with complete clarity in the last half an hour. I am not sure, therefore, what the Ruling is. I listened to my right hon. and learned Friend the Member for Sheffield, Neeps-end (Sir F. Soskice) and I appreciate the points which he put which come within the Short Title of the Bill. I understood you to say, Sir Charles, that this was not a question of limitation of figure by the Resolution; it was a question of limitation of scope.
The Short Title of the Bill makes it clear that this is a Bill
…to alter the law as to certain of the personal reliefs.
If that were the only matter concerned, then clearly, subject to the normal law about increasing the charge beyond the limit of the Resolution, this was within the scope of the Bill and, therefore, a matter properly to be discussed.
I understand from what you have said to my right hon. Friend the Member for Bishop Auckland that, although the Government have introduced a Bill to alter personal reliefs, they have so devised the Resolution, and done so deliberately, as to deprive the Committee of the opportunity to discuss the whole question of


personal reliefs in the sense of giving any relief. In fact, the Resolution is so devised that personal reliefs shall give no relief, and the only thing we can discuss is whether to accept the fantastic mechanism of give-and-take, or put-and-take, which the Financial Secretary described to the Committee so eloquently and not very accurately about an hour ago.
In these circumstances, it seems to me that my right hon. Friend took a course which is extremely important, in view of the fact that it is suggested that the opinion of the country shall be taken on this matter within a few days—that the opinion of the country shall be taken on a matter about which they cannot be fully informed and about which a debate has not been allowed here because of the use of the rules of the House by the Chancellor deliberately to stultify and stop discussion. My right hon. Friend suggested that the time had come when a Motion to report Progress should be accepted by the Chair.

The Chairman: I made it clear that I would not accept such a Motion. If the hon. Gentleman was speaking on that, he was out of order because I cannot accept it.

Mr. Jay: You said, Sir Charles, that your reason for not accepting the Motion was that the Resolution was debated by the House during the Budget debates and that it was quite obvious that that Resolution would invariably lead to this restriction later on. In fact, I myself repeatedly asked the Chancellor, during the Budget debate, for an assurance then, before we passed the Resolution, that this difficulty would not arise at a later stage.
I asked him that question several times and he said that it was impossible to deal with it at that stage, because, in effect, he did not understand his own Resolution, and that it could all be satisfactorily discussed when we came to this stage. With all respect, surely it cannot be correct that we should now be told that we cannot even discuss this matter on a Motion to report Progress when we were given those assurances earlier.

The Chairman: I never gave any assurances. I am simply carrying out the rules of order. Whatever the Chancellor may or may not have said, I am responsible for the calling of the Amendments.
I have taken the best advice I can get. I have come to the conclusion that what I have done is correct and I stand by it.

Sir R. Boothby: Is not it a fact that the Opposition concurred in the Resolution which is now limiting the scope of our debate? They are not being dictated to; they concurred in the circumstances.

The Chairman: As far as I remember, there was no Division, but I should not like to pledge myself on that. That has nothing to do with me.

Mr. Eric Fletcher: One reason why the House concurred in the Budget Resolutions was because of certain assurances given by the Chancellor of the Exchequer during the discussion. This point was raised during the discussion, and the most extraordinary feature of the debate during the last half an hour is that the Chancellor has sat silent. We have not had a word from him.
You have given a Ruling, Sir Charles, and we sympathise with you in that; but there is one point about which I should like to ask. There is on the Notice Paper an Amendment to Clause 2, page 2, line 37, in the name of my right hon. Friend the Member for Bishop Auckland (Mr. Dalton), the effect of which would be to increase the child allowance. That is quite clearly within the scope of the Bill, because one of the Budget proposals is to raise that allowance from£85 to£100.

The Chairman: No Amendment to increase an allowance above the upper limit given in the Resolution may be moved, and that Amendment goes beyond that figure.

6.30 p.m.

Mr. Fletcher: I entirely appreciate that, Sir Charles, I am saying that none of the Amendments with which we are concerned relates to the general discussion. It is significant that the Chancellor of the Exchequer quite definitely said that it was not his wish that the Opposition should be deprived of an opportunity to put down Amendments; and this, surely, is one of the important factors on which the Election will be fought—whether these allowances are adequate or not. We wish to make an alteration and to suggest that the child allowance should be increased, whatever consequential change is made.
It has always been the custom, in debates on the Finance Bill, that the Opposition should have the right—indeed, it is a constitutional right—to put forward alternative suggestions. It is quite obvious that on this occasion the Budget Resolutions have been so drawn that we should not be in order in putting down new Clauses, because there is no Budget Resolution dealing with the general law. But, in view of what the Chancellor said, we fully understood that we should be able to debate matters that would relate closely to changes in the Income Tax law.

The Chairman: The hon. Gentleman must not blame the Chancellor. He has no responsibility for selecting the Amendments or for ruling that Amendments are out of order.

Mr. Fletcher: But surely—

Hon. Members: Order.

The Chairman: I am here to carry out the rules of order to the best of my ability. It may be thought sometimes that I do not do so very adequately. Obviously, at the moment my Ruling does not meet with the pleasure of many hon. Members. But that has nothing to do with the Chancellor. He may think that an Amendment is in order when I think differently—the extraordinary thing is that I am the one who wins.

Mr. Fletcher: I hope, Sir Charles, that you will not think for a moment that any hon. Member on this side of the Committee is attempting to blame you in any way—

The Chairman: But that is what hon. Members are doing.

Mr. Fletcher: If I may explain, I was attempting to say—no one was suggesting that—that the Chancellor—

The Chairman: I have just said that the Chancellor has nothing to do with it. I am responsible, and not the Chancellor. I do not ask the right hon. Gentleman for advice about which Amendments are in order.

Mr. Frank Bowles: I have no doubt. Sir Charles, that you do not think that the Chancellor is responsible, but I am, in a sense, prepared to blame the Chancellor; because at the end of his Budget speech he said that the last Reso-

lution was not the usual one, making general changes in the law, and that he hoped you would allow the discussion to go a good deal more widely than would be usual if the Resolution which we usually discuss had been before the House.
In view of that suggestion from the Chancellor, to which you agreed—in other words, to let the debate go much wider because of the peculiar circumstances of the Finance Bill this year—may I respectfully suggest that you might also agree to the Opposition going a bit wide and relax the rules to some extent regarding the Amendments which my hon.. Friends have put down?

Mr. Mitchison: May I speak once more?

The Chairman: May I answer one hon. Member at a time?
We generally debate a Resolution relating to an amendment of the law, but we did not do so in 1929, nor in 1945, and we have not such a Resolution now. Those are the precedents by which we are bound. I am having them looked up at the moment. I let the debate go wide during the Committee stage of the Money Resolution because there was a precedent which I will have looked up. But we cannot always operate in that way, and I am now ruling out Amendments which are not in order.

Mr. Mitchison: The point I wish to put is this. You observed just now, Sir Charles, that it was obvious that the Money Resolution tied the debate very closely. In general, I would respectfully agree. But it was not at all obvious what effect that would have and I should like to call in aid the right hon. and learned Member for Chertsey (Sir L. Heald) who was, until recently, the Attorney-General. On 20th April—it is reported in column 297 of the OFFICIAL REPORT—the right hon. and learned Gentleman took the view, so far as I can see, that it would be possible to make Amendments with regard to the rate within this Income Tax band.
The normal procedure in previous debates, where there was a reduction of 6d. in the rate, was to pass on the whole of the 6d. In this case, only 3d. has been passed on. With respect, I would say that I feel that little about the Income


Tax is obvious and that nothing whatever was obvious about the reduced rate reliefs; and that that part is exceedingly complicated.
Surely the spirit of the thing, at any rate—and all that any of us could gather at the time—was that the question of whether the whole or only half of this 6d. should be passed on would be debatable, and capable of Amendment. Accordingly, in good faith, we have put down Amendments substituting the passing on of 6d. for the 3d., and now I understand that those Amendments are out of order. All that we can do is to pass on 1½d.—for reasons relating more to mathematics than good sense—in one part of the band.

The Chairman: The hon. and learned Gentleman is encouraged to call on one of his own profession to help me. I do not need that help. I know perfectly well what we are doing and that what I have said is correct. I hope that we may now proceed with the business.

Mr. Fletcher: On a point of order. I understand from this discussion that the only reason we are being prevented from discussing Amendments which we desperately wish to discuss, and which we think it our duty to discuss in the interests of the country, is the way in which the Budget Resolutions are drawn.
The position is that the Government have set aside the whole of today and Friday for the discussion on Committee and Report stages of the Bill. I gathered from what the Chancellor said last week—although the right hon. Gentleman has been notably silent this afternoon—that he is as anxious as we are that we should not be deprived of our rights. Would it not be possible to have the Budget Resolutions amended in such a way that on Friday we should be able to raise the points we wish to raise?
I urge you, Sir Charles, to appreciate that we believe—in accordance with tradition and what has always occurred throughout the centuries—that it is the duty and the right of the Opposition to put forward these points for the consideration of the country, particularly on the eve of a General Election.

The Chairman: That is not a point of order. There is nothing that I can do about it.

Mr. Fletcher: The point of order I am raising—

The Chairman: I am saying that it is not a point of order.

Mr. Fletcher: The point of order I was trying to submit to you, Sir Charles, was to ask whether, were this debate adjourned and the Budget Resolutions suitably amended, it would be possible for us, on Friday, to debate the Amendments which the Opposition feel they are entitled to debate and so prevent our being gagged and silenced from putting forward views on which the country will be asked to form an opinion on 26th May?

The Chairman: I find it difficult enough to deal with direct points of order. Hypothetical points of order are beyond me.

Mr. Dalton: May I try to help to elucidate the difficulty into which we have been led by the Chancellor's, no doubt quite innocent. ambiguity at an earlier stage, Sir Charles?
The Chancellor told us—and this, I think, is within the recollection of the Committee—when this matter was raised on the Budget Resolutions, that he could not then say exactly how the Budget Resolutions would operate, and in particular, the absence of the Resolution which we normally debate on the general amending of the law. The right hon. Gentleman did say—and it has already been quoted—that this matter could be discussed later.
It now appears, following your Ruling, Sir Charles, which I repeat that we at once accept, that certain unintended results have followed, which have taken the form of a very sharp and severe abbreviation of our debate on these proposed improvements—as we think—in the Income Tax arrangements. The Chancellor said the other day that everything he did was intentional. I think I have here found an exception to that dictum—

The Chairman: Is this a point of order?

Mr. Dalton: Yes.

The Chairman: I am not responsible for what the Chancellor says—so long as he behaves himself in this Chamber.

Mr. Dalton: I do not wish to burden you unduly with responsibilities which, as you rightly say, should fall on the right hon. Gentleman's conscience rather than on your judgment of the rules of order. But would not the Chancellor now help us by himself proposing that we should report Progress, so as to allow time for the Budget Resolutions to be brought in again simply with the view—

Lieut-Colonel W. H. Bromley-Davenport: Order.

Mr. Dalton: If I am out of order I shall not be told of it by the hon. and gallant Member.
Will not the Chancellor assist us by himself proposing the Motion which I moved but which you, Sir Charles, were not disposed to accept? We could then review the very restricted conditions which you have so clearly explained to us and be enabled, on the eve of this fateful General Election, to have the opportunity for a real democratic debate instead of the farce to which this debate is being reduced by the Government.

The Chairman: I do not have to give a reason for my Ruling, but I thought it was more courteous to the Committee to do so. I think that we ought to get on with the Amendment now.

Hon. Members: A Government diktat.

Mr. Dalton: Set the Reichstag on fire.

Sir F. Soskice: I beg to move, in page 3, line 13, to leave out "£60" and to insert "£100."
After the Reichstag has been set on fire, I should like to address myself, Mr. Thomas, to the extremely limited point which remains open to discussion. Possibly it would be convenient to the Committee to discuss the other Amendments which, as your predecessor has ruled, stand or fall by this Amendment.
The Amendment seeks to restore to what it is under the existing law the limit up to which the lowest reduced rate is charged. The limit under the existing law is£100. I should like to have the attention of the occupants of the Treasury Bench. I do not know which Minister is going to reply but, whoever he is, he will be in a better position to answer if he knows the argument.

Mr. R. A. Butler: I was wondering about the scope of what the right hon. and learned Member was talking about, and I was mentioning it to my hon. Friend the Economic Secretary.

Sir F. Soskice: Perhaps I can repeat the purpose of the Amendment so that the right hon. Gentleman can reply. The Amendment seeks to restore to what it is under the existing law the limit up to which the lowest reduced rate is chargeable in respect of Income Tax. As the Committee knows, under the existing law the limit is£100. The Chancellor seeks in the Finance Bill to reduce that limit to£60, with the result that in respect of any income over£60 the higher rate which is appropriate to the next band of income is chargeable.
We seek in the Amendment to restore the£100 limit in place of the£60 limit. Later Amendments which, Mr. Thomas, your predecessor proposed to call and which are in order, would also seek to restore the 3d. which the Chancellor has not passed on from the 6d. reduction in the standard Income Tax rate, but at the moment we are merely concerned with the limit of£60 as against the limit of£100.
Prima facie, to reduce the limit from£100 to£60 seems an unnecessary piece of what one can only describe as stinginess in treating the lower income groups. By common consent, and as has been pointed out over and over again, the higher income groups are going to derive a very substantial advantage. Those whose gross incomes run to many thousand of pounds will derive an advantage in having, in respect of each of those pounds of their large incomes, a reduction of 6d. in the tax.
As has been pointed out and urged upon the Chancellor, the Economic Secretary and the Financial Secretary, it would seem appropriate that, if that is to be done in respect of large incomes, the Government should at least try to give the same corresponding advantage, as far as practicable within the limits of the financial possibilities of the year, to those enjoying smaller incomes. The Amendment is one effort to give them some redress in that direction.
Looking at the structure of the whole proposals, it seems extraordinary that, when the higher income groups are given


a substantial advantage, this very moderate advantage which is enjoyed within the existing law is withdrawn from other Income Tax payers, including the lower groups. This matter, of course, has been raised before. It was raised in the Second Reading debate on the Finance Bill. The Financial Secretary then gave an answer on which I should like to press the Government because, quite frankly, it seems unintelligible, at any rate as it is put.
6.45 p.m.
After saying that it was necessary to consider this change in the lowest Income Tax rate limit in connection with the increases in the tax-free allowances which had been given to single men and married men—an extra£20 for the single man and£30 for the married couple—the Financial Secretary went on to say:
…if one simply made those increases in the personal allowances and made no difference at all in the bands, the benefit which the Chancellor was desiring to concentrate on the people now paying quite small amounts of tax would have gone right up through all the taxpayers at the higher levels."—[OFFICIAL REPORT, 25th April, 1955; Vol. 540, c. 631.]
If that is the reason which has actuated the Chancellor, it is a reason which I urge upon him will not stand examination for one moment.
After all, the effect of charging tax at the lower rate is that those who have small incomes derive a substantial advantage in respect of the lower rate of tax chargeable. The rate of tax chargeable is not 8s. 6d. but smaller amounts. Under the Chancellor's present proposal, the smaller rates are 2s. 3d., 4s. 9d. and 6s. 9d., in accordance with the band which is appropriate to the particular income level. If the intention of the Government really is that the result of imposing the reduced rate limit should not be passed on so as to produce an inordinate advantage to rich taxpayers, the remedy is in their own hands.
If they really want to make sure that large incomes do not derive inordinate advantage, they could, as we sought to ensure today in an earlier Amendment, perfectly easily say that the reduced rate limit applicable to the lower incomes should not be enjoyed by the large Income Tax payers. In an earlier Amendment which the Committee discussed, we made precisely that proposal in connection with

some of the other reliefs which the Chancellor has given. If that is the anxiety of the Financial Secretary and the Economic Secretary, the remedy is in their own hands. They could have assented to that proposed Amendment or could have made some such change in the tax structure without our prompting. Therefore, it seems to me that that was not their motive. I call attention again to the words which the Financial Secretary used in the Second Reading debate. He said that the Chancellor was anxious to see to it that the advantage of paying less tax in respect of the lower portion of one's income is not passed up to what he calls the higher levels of taxpayers. If that is his anxiety he can easily so enact, but the fact that he has not done so surely should not redound to the disadvantage of people to whom payment at the lower rate will matter a great deal.
If the Amendment I have moved is accepted, payment at the lower rate would mean that persons who just come into the full scale of Income Tax liability would have to pay about£12 less than they would have to pay if the law was as the Government seek to have it. I cannot understand what is the point of depriving them of that. I do not know whether the Financial Secretary really understood the reason which he was trying to give the other day during the Second Reading debate. When he was pressed about it he went on to some other aspect of the Bill.
I cannot help thinking that he either did not have an easily comprehensible brief upon the matter or, if he did have such a brief, he did not devote to it the necessary amount of study to absorb the reasoning behind it and make that reasoning clear to the House. If there is a real reason why the moderate relief which we suggest should not be available to small Income Tax payers, let us be given it, so that we can examine it, but let it not be obscured in the phraseology used by the Financial Secretary, which conveyed very little to my hon. Friends.
The Chancellor has said, "I am proposing to reduce the limits from£100 to£60." In other words, in respect of any£of one's taxable income over£60, a higher rate will be paid under his present proposal. Previously one had to have above£100 before the higher rate was paid. We press the Government to leave


the£100 limit as it is. Do not let us disadvantage the small taxpayers, as they will be disadvantaged if this change is made. That is all we ask the Government to do, and, having regard to the very narrow limits within which the Resolution has been drawn, that is all we can do. We ask for this very moderate scale of relief in order to try to help people who get extremely little out of the Budget.
Those are the arguments which I should like to be answered. They were put during the course of the Second Reading debate, but the Financial Secretary did not answer them. I do not know whether he has now had time to go into those arguments rather more fully. Perhaps he was taken unaware when the matter was discussed during the Second Reading debate. Perhaps he is in honour bound to reply, in view of his performance during that debate. At any rate, I hope we shall be given the reason which motivated the Government in taking this course, so that we can make up our minds whether or not to ask the Committee to divide.

Mr. Hale: I do not want to say more than a few words, because I am so entirely in agreement with what has been said by my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice), but it is important that we should have it on record quite clearly that the only reason this Amendment is being debated is that any Amendment increasing the benefits is out of order. We are, therefore, not able to explain our full policy as we should wish to do.
My right hon. and learned Friend always speaks with exceptional courtesy, and he did so in this case. It seems to me that there is only one reason for the introduction of this provision, and that reason is abundantly clear. The Chancellor of the Exchequer, in referring indirectly to this matter during the discussion upon Clause 1, said that he had tried to carry out the recommendations of the Royal Commission which had recommended the removal from taxation of a large number of people who were paying very small sums. There is no doubt about the reason for that recommendation. It was that it is not economical to collect those small sums.
There are many people who, fortuitously—almost accidentally—find themselves, by a slight increase in their salaries, suddenly coming just within the

Income Tax range; having to have P.A.Y.E. certificates arranged for them and the whole paraphernalia of collection, assessment, and possibly appeal, related to them. They are paying an average of 2s. 9d. a week, and they number about 2,400,000. It is not worth collecting the money. It costs a lot of money to collect it, and causes much exasperation. It is a good thing, even from a Tory point of view, to write those people off.
That is what the Chancellor did, and then he said, "But this is still costing us rather a lot of money, and will give these people rather more than I intended. There is a very ingenious way of getting it back, namely, by reducing the amount of allowances at the lower rate of tax." There is no argument about that. No hon. Member opposite dare controvert what I have said. The Chancellor said, "I am giving them 9d., and that is too much. I am going to take 6d. back."
The real effect of a tax concession is the percentage increase in spending power which it gives to a man. I quite agree with the Chancellor of the Exchequer that a concession of£10 to a man earning£20 a year is a good deal more than is a similar concession to a man earning£2,000 a year. It is quite clear that it raises the spending power of the first man by 50 per cent. whereas, to the other man, it is of very little importance.
If we look at the figures which are affected by this Clause—which is directed principally against the lower-paid workers—we must do so in terms of those percentages, and we then find that whereas the increase in spending power to the man earning£500 a year is about 2½per cent., the increase to the man at the top rate is 25 per cent. or 30 per cent. It is quite disgraceful and shocking that this increase of taxation—because it is an increase—is deliberately, destructively and decisively applied primarily to the lower-paid workers. It obviously makes no difference to the higher income groups. It is directed to the lower-paid groups precisely because the Chancellor is afraid that his reduction of 6d. in the£all round would give too much benefit to the lower-paid workers. I challenge anyone to deny it. There is no other possible explanation. That is why this Budget is peculiarly contemptible.
I wish the Chancellor no harm; I have considerable admiration for him. A week or two ago I thought that after a short and nominal regime he might take over the leadership of the Tory Party, and become the only able leader it has produced from its own ranks since the Younger Pitt. I do not know whether that can happen now, when people have studied the Budget.
The Chancellor has been throwing up a smoke-screen in the debates which we have had. Apart from the fact that in drafting the Budget Resolution he has chosen deliberately to prevent us from moving Amendments that we, as a Labour Party, would wish to move, he talks about a reduction in taxation when, in fact, the Budget increases taxation. The question whether or not taxation is increased is a matter of expenditure. If one is raising more money from the public as a whole, one is increasing taxation, whatever the rates may be.
If the Chancellor had an enormous surplus at his disposal, he had it for one of two reasons. It was either because he deliberately misled the House last year, in framing his Budget—which I do not believe for a moment—or because he made one of the most extraordinary miscalculations ever made by a Chancellor in estimating his Revenue. Having to deal with that surplus as best he could, and having some money to distribute upon the eve of the Election, he asserts that he has given 6d. to everybody, but he has taken back 3d. off the lower-paid worker by this ingenious and rather dishonest limitation upon the concession given to him. 7.0 p.m.
In an earlier discussion the Chancellor said that he had made an all-round reduction of 6d. in the Income Tax. It was made all round, to everybody, millionaires and all, as a matter of financial rectitude—one could not make fish of one and fowl of another; one could not differentiate between classes of people; one had to give it to everybody in the same way. That is the old argument which we have heard before about equality. Everyone can go into the Ritz Hotel. Everyone can have an Income Tax concession, an expenses allowance, buy a car, and so on. It is rather a question of what your salary is, what your allowances are, and what you have available to spend.
The Chancellor, having talked about financial rectitude and having indicated that it sprang not so much from the rectitude of his own conscience but from the sight of Gladstone's eyes, which were looking down at him from his painting, and which had petrified him into a rather temporary attitude of rectitude, now comes forward with this proposal about the liability on the lower band of Income Tax. We are to have class distinction applied to the lower-paid workers. We now see that the tax concession does not apply right through but that its most damaging, savage, and particular effects fall upon the lower-paid worker.
Since I have sat here this afternoon I have been wondering whether I made some frightful error when I was reading the account of the Budget speech. I have wondered whether we were discussing something else. I listened to the suggestions from the Government benches that taxation was being reduced when it is, in fact, being increased. I listened to the suggestion of benefits being given when, in point of fact, the Chancellor is filching by false pretences hundreds of thousands of pounds from people and is proposing to give only a little of it back. I listened to our being told that we cannot discuss, on any of these Clauses, any alternative means of allocating this money.
It has become plain to me beyond any possibility of doubt that the Government have framed a fraudulent Budget in an effort to deceive the electors, and that they framed a Budget Resolution to prevent any discussion which would enable light to be given to the electors to show what the real proposals and the real facts about the Budget are. We are presented with proposals which, from start to finish, are designed to mislead.
I have admired the Chancellor of the Exchequer in many ways. I admired his struggle to save the£, which is worth less now than it was in October and is considerably lower than it was in 1951. We have heard about his financial rectitude, his careful computations and his careful estimates, every one of which has been wrong, yet Government supporters can still get up and say that this Budget is the result of his stupendous ability, diffident character, and irresistible charm. I recognise his charm. There is no question about his charm. In my former days, when I was a practising solicitor, I encountered many confidence tricksters of


one sort or another. Charm and ability were always there, coupled with a capacity to present financial matters in a most impressive, instructive, and moving way.
With every desire to use words that are in no way controversial—[Laughter.]—well, over-controversial—I suggest that this Income Tax proposal is a mean and contemptible way of filching back a few pennies from people on the lowest band of Income Tax liability, from the very people who work for those who are in control of the private sector of business, who produce things, and without whom no private business could exist. This is coupled with a contemptible way of presenting it, so as to try to conceal from the public that a confidence trick has been played upon them, and that when they get their P.A.Y.E. demands they will find that something has been taken from them which offsets any benefits which may have been given to them.

The Economic Secretary to the Treasury (Sir Edward Boyle): I am glad to have this opportunity of explaining to the Committee the reasons for the cut, proposed in the Bill, of£40 in the first band of income chargeable at the lowest reduced rate of tax. I apologise to the right hon. and learned Member for Neepsend (Sir F. Soskice) for any discourtesy I may have offered him at the start of his speech. He was always extremely courteous to us when we were in opposition. The very last thing I want to do is to be discourteous to him.
This cut of£40 cannot be considered in isolation, but must be considered along with my right hon. Friend's proposal that the single person's allowance should be increased by£20 from£120 to£140, and the allowance given to a married man increased by£30 from£210 to£240. This is a unified scheme, which proposes an increase in the basic personal allowances coupled with a reduction in the first band of Income Tax chargeable at the lowest reduced rate. It will have the effect of exempting from Income Tax about two million people.
The object of this scheme is precisely to meet the point put forward by the Royal Commission on the Taxation of Profits and Income, in its Second Report, that the present starting point of liability

to tax of individuals was too low and should be raised, but in a way that did not benefit people with higher incomes. It recommended that this object should be achieved by introducing a minimum amount of earned-income relief.
I recall that during the Report stage debates on the Finance Bill last year a new Clause was moved by the hon. and learned Member for Kettering (Mr. Mitchison) and was seconded by the hon. Member for Islington, East (Mr. E. Fletcher), to give effect to the scheme of the Royal Commission. This scheme involved serious administrative difficulties, particularly with regard to P.A.Y.E. My right hon. Friend has put forward the present proposals which, by increasing the basic personal allowances and cutting back the lowest reduced rate, attains the Commission's objective in a very much simpler way. It is worth pointing out that, taken as a whole, the scheme of my right hon. Friend will be more favourable in most cases to taxpayers with the lowest amounts of taxable income than the suggestions which the Royal Commission put forward. I would like to give just two or three examples. I will be as quick about them as I can, because I know that it is tedious to listen to too many figures.
The present starting point of liability to tax on the earned income of a single person is£155. Under the Royal Commission's scheme, the starting point would be£183. Under the proposals of my right hon. Friend, the starting point will be£180. The single person does a little bit less well than under the Royal Commission's proposal. The position is very different for the married man with two children. His present starting point of liability on earned income is£489. Under the Royal Commission's scheme, which the hon. and learned Member for Kettering talked about last year, the starting point would be£518. Under the present proposal, the starting point will be£566.
When we remember that the married man with two children starts to be liable for tax on earned income only when he is earning£566 a year, it really becomes very difficult to share the view of the hon. Member for Oldham, West (Mr. Hale) that it is the lowest-paid worker who will suffer most from this cut in the first band of liability.

Mr. Hale: Not all married men have children.

Mr. Mitchison: I should like to get my mind clear on two points. My recollection is that two schemes were put forward in that Report. I do not know to which of them the Economic Secretary is referring. Perhaps he will tell us. The second point is that the Royal Commission's proposal was for a minimum amount of earned-income relief. Surely the Chancellor's proposal is entirely different. It has nothing to do with earned income.

Sir E. Boyle: On the first point, I confess I cannot give an answer off-hand. I am having inquiry made, and will communicate with the hon. and learned Gentleman afterwards. The only reason why I quoted the Royal Commission's scheme was to show that my right hon. Friend's proposals were an attempt to implement the recommendations of the Royal Commission in as simple and practical a way as possible, without involving administrative difficulties.

Mr. Mitchison: It depends on which recommendations are referred to.

Sir E, Boyle: I am referring to the recommendations which the hon. and learned Gentleman and other hon. Gentlemen discussed on the Report stage of the Finance Bill last year.
I quite agree with the hon. Member for Oldham, West that not all married men have two children. But if one takes the married man with one child, his present starting point of liability on earned income is£380; under the Royal Commission's scheme it would be£408, and under the Budget proposals the starting point of his liability on earned income is£437.
The right hon. and learned Gentleman talked of stinginess to the lower income groups, and said that it was the higher income groups which would derive most advantage from my right hon. Friend's proposals. It is fair to say that it is those who pay the standard rate who, so to speak, suffer most from the cut of£40 in the first band. It means that they reach the point in their income where they have to pay the standard rate£40 earlier than they otherwise would.
I hope that, now that I have explained why the scheme was introduced, hon. Members may feel able to withdraw the

Amendment. I have tried to explain how the scheme came to be put forward. I hope that I have convinced the Committee that the lower-paid workers will not suffer as a result of the proposals. In fact, no one will altogether pay more tax as a result of the joint proposal to increase the personal reliefs and, at the same time, to cut£40 from the first band of the taxable income of individuals.

Amendment negatived.

Sir F. Soskice: I beg to move, in page 3, line 20, to leave out "1s. 9d." and insert "1s. 10½d."
This Amendment is really complementary to the last one which was moved and seeks to restore the 3d. reduction in the existing rate of relief. I cannot say that I move it with any great optimism, having regard to the answer given to my previous Amendment. If the Government are not prepared to concede that the£60 should go to£100 as it was before, but insist on reducing the relief, I suppose that it is likely that they will persist in their intention of reducing the relief by 3d. below last year's figure.
What the Bill does is perfectly clear. Last year, relief was given by deductions of 2s. 6d., 5s. and 7s. in respect of the lower ranges of income. Those reliefs have been respectively reduced by 3d., and are now 2s. 3d., 4s. 9d. and 6s. 9d. That, again, to us on this side seems to be a wholly unnecessary piece of stinginess. When I say "wholly unnecessary piece of stinginess" I mean that it is particularly unnecessary and particularly noticeable for its quality of stinginess when one considers the reliefs that have been made, as has been pointed out over and over again—and it is not supererogatory to point it out once more—to those who have very large incomes.
7.15 p.m.
If one has a large income one gets relief in the sum of 6d. in respect of every£of that large income. In those circumstances, it seems very extraordinary, when one looks at people who seek to derive their advantage from the reduced rate reliefs, to find that the Chancellor is taking off 3d. from the amount to which they would have been entitled last year. In the first place, therefore, he has made them pay the full rate£40 earlier—if I might use that expression—and then goes


on to add the further disadvantage of getting by way of reduced-rate relief 3d. less in each band than they would have got last year.
In his Second Reading speech, the Financial Secretary did not even venture to vouchsafe a reason except that I understood that he thought it was necessary to adopt the reduced rates at 3d. to make, as he said, "roughly proportionate reductions." I can only interpret that as meaning that when dealing with rich Income Tax and Surtax payers he thinks it appropriate to give them a reduction of 6d.; when dealing with moderate incomes he says "their relief must be much less; I will give them only 3d." To us on this side that seems to be monstrously unjust and unnecessary.
What does the Financial Secretary think it would cost the Chancellor to restore this small, measly 3d.? Has he any estimate of the cost of that? I presume that the Chancellor has considered what it would cost to leave the law as it was last year and to leave the rate of reduction as it was last year. Can the Financial Secretary tell us that this will really make a great deal of difference to the balance of the Budget? If he cannot, and if the sum involved is comparatively small, I press upon the Government that at least they should give this very slight, moderate relief to those to whom it would mean so much.
I do not think I can elaborate the reasons for the Amendment—they are self-evident. It simply asks the Chancellor to say that the rate should stay as it was last year and should not be dropped by 3d. When a man has a small income which is only sufficient to bring him into the full standard rate the 3d. means a great deal. It might not mean much to a person with a large income, but to a person who just comes into the standard rate it is very important. For those reasons, I ask the Government to say that the amount should be restored to at least last year's figure.

Mr. Mitchison: I find it very difficult to understand why the full 6d. has not been passed on, it having been the practice for several years now to pass on any reduction of tax to those lower-band taxpayers. For some reason or other that practice has been abandoned this year.
I want to say at once that one thing that I feel sure all of us will welcome in this Clause is that the peculiarly involved piece of choctaw—which was the original reduced-rate provisions—is going to disappear. It was a quite incredibly involved piece of business. It started with the Income Tax Acts, and the Finance Act, 1952, in a great hurry, put further complications into it. The result was an extraordinary sum which meant nineteenths of the amount of tax payable. When the nineteenths were in force they meant, in plain English, 6d.—because the standard rate was 9s. 6d. Accordingly, when the standard rate was reduced to 9s. the nineteenths became eighteenths and we went on with the choctaw in full force, with that momentous change in it.
This time we expected that the eighteenths would become seventeenths, or, in plain English, we expected 6d. off. Indeed, we were justified in that because when the 9s. 6d. was reduced to 9s.—and I notice by the way that the Chancellor justified it in very much the same terms as he used today—he called it:
…a very potent augmentation of the company reserves available for maintenance, innovation and development … 
He went on:
I have not forgotten the smaller incomes, and with this proposed reduction of 6d. in the standard rate of Income Tax I link proposals … 
and the proposals were to reduce each of the rates by 6d. Then, with that financial rectitude which he has so clearly shown to us today, the right hon. Gentleman added:
Thus the benefit of the reduction in the standard rate will be carried down, without restriction, to the lowest incomes that are liable to Income Tax."—[OFFICIAL REPORT, 14th April, 1953; Vol. 514, c. 60.]
I notice that the concession costs quite a bit, and the reason for that is obvious. It is that the number of people who will be affected because they are on these low incomes is considerable. What we are complaining about is that they are so little affected. One is entitled to ask today what has happened this time. Has the right hon. Gentleman forgotten the smaller incomes? I think not, because he deliberately explained that he could not pass down the benefit in this instance. One looks to see the reason for this curious change.
We had a tradition quoted. The party opposite is strong on principles and traditions, but I find its reliance on them somewhat intermittant and obscure. That applies in this case, because what the Chancellor said he was doing was as follows:
I return to the tradition that reductions in the general rates of Income Tax should be broadly proportionate to the rates already borne."—[OFFICIAL REPORT, 19th April, 1955; Vol. 540, c. 59.]
That sounds magnificent until one begins to look into it.
The Treasury has been working out these incredibly involved sums for years past—and I spare the Committee the detail of them because the language is staggeringly complicated, being about nineteenths, eighteenths and all the rest of it—and I should have thought it would not have escaped the attention of the Treasury that if the higher range of taxpayers is relieved of 6d. and the lower range of 3d., a reduction in the general range of Income Tax is not being made "broadly proportionate to the rates already borne."
I really do not know what those words mean. I respectfully suggest that they are complete nonsense, and that there is no reason for not doing what was done last time, and passing on the full amount of the reduction to the people at the bottom of the scale, who need it most. If there is some principle that determines this matter, why is it different, when the reduction is from 9s. 6d. to 9s., from what it is when the reduction is from 9s. to 8s. 6d.? Are the mathematics of the Treasury so remarkable that it really thinks that the difference between those two reductions amounts to the difference between 3d. and 6d.?
It does not seem to me to be anything of the kind. I should have thought the principle was a moral principle and not a bogus mathematical fallacy. I should have thought the moral principle was that when a reduction was being made in favour of companies, in favour of Surtax payers, in favour of all those who pay the full rate, the last people to whom it should be denied are those on the reduced relief bands. Yet that is what is happening in this case. I find it incomprehensible, and so I hope we shall have an explanation which goes beyond a mere statement.
I understand, Sir Rhys, that the Amendment we are discussing is the one to increase 1s. 9d. to 1s. 10½d. Am I correct?

The Deputy-Chairman (Sir Rhys Hopkin Morris): The Deputy-Chairman (Sir Rhys Hopkin Morris) indicated assent.

Mr. Mitchison: No doubt that is what we have to discuss, because every other Amendment is out of order and it is a fantastic state of affairs.
The previous Attorney-General, the right hon. and learned Member for Chertsey (Sir L. Heald)—no mean authority on these matters—stated in the House that there would be no difficulty, because
in the case of Clause 2 (7)"—
which is what we are talking about—
relating to the rate not exceeding£210 and the rate between£210 and not exceeding£360, it would be possible, within appropriate limits, to make Amendments."—[OFFICIAL REPORT, 20th April, 1955; Vol. 540, c. 297.]
I understand, Sir Rhys, that this is impossible as regards, at any rate, the rate not exceeding£210.
I say that if Resolutions are put forward by the Government, and passed by the House, and we are not told clearly what they mean, it is natural that so competent and so expert an authority as the previous Attorney-General should misapprehend their meaning. Also it is ridiculous and fundamentally undemocratic to use those Resolutions as a means of stifling proper Amendments on a matter which affects the small taxpayers. It is dead wrong, it is indefensible, and I adopt the protests made with regard to a similar restrictive Clause on the Purchase Tax.
I shall not develop the point which was made earlier in the day, but it is fantastic that the only Amendment which we should be able to put forward on a matter affecting large numbers of small taxpayers—the people whom we should look after particularly—is one in relation to the highest of the three bands to do half of what we want to do. If that is the way in which Resolutions are to be used by the Government, they will richly deserve the fate which no doubt they will receive shortly at the hands of the electors of this country.
Both on that account, and because it is cynically unjustifiable to deny to the small


taxpayer the full relief given both to the large taxpayer and to the limited company, I urge the Government at this last moment to accept all that we can move, an Amendment for half of one-third of what we want. Whatever the full relief would cost, I should have thought that even a Tory Government might go that far in favour of the wage earner and the man with the smaller income, who are the people who pay at these reduced rates.

Mr. H. Brooke: This Amendment is skilfully drafted to keep within the Rules of Order. All it would do would be to fix the highest of the reduced rates at 6s. 7½d. instead of 6s. 9d., as proposed in the Bill, and 7s. as it has been up to the present. I appreciate from the speech of the right hon. and learned Gentleman that it is not unreasonable for him to seek to enlarge the scope of the discussion so that one can touch on the broader issue which he mentioned, namely, the issue of whether all the reduced rates and not only the standard rate should have been reduced by 6d.
I want to show the right hon. and learned Gentleman the utmost courtesy and give him all the information I can. This Amendment to make a change of 1½d. in the highest of the reduced rates would cost£3¼ million. The larger change of structure, which I think is really in his mind, to bring the 6d. reduction right through the reduced rates as well as the standard rates, would cost£34 million.
As was explained at an earlier stage of the Bill, what my right hon. Friend has done is to revert to the practice which was almost universal in the years before the war, namely, to make changes in the reduced rates proportionate to changes in the standard rate. That is founded on a sensible principle. We all wish to devise a tax structure which will cause the burden of the tax to rise in a steady progression as income increases, and not to go by jumps. If it goes by jumps, that is the kind of gradation which would be unfair to people whose incomes happen to fall at unlucky places. I think the Committee will quickly appreciate that the natural way of ensuring a steady gradation, and maintaining a steady gradation when we have one, is to make changes whether upwards or downwards in the reduced rates proportionate to, but

not equal to, the changes in the standard rate.
7.30 p.m.
It is interesting to look back at the facts. With the exception of, I think, only one year, it is true that from 1920–21 to 1934–35 the reduced rate—there was only one reduced rate then—was at half the standard rate and varied accordingly. From 1935–36 to 1939–40, the reduced rate was usually one-third the standard rate, and in the Budgets of those years there was no question of every change in the standard rate being compelled to be accompanied, as I think the Opposition would now wish, by an exactly equal change in the reduced rate.
It is quite true that in the year 1951 the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell), rather harshly as I think, increased not only the standard rate by 6d. but also both of the reduced rates which then existed by 6d., and it was that action which my right hon. Friend specially corrected in his Budget of 1953, when he had the opportunity precisely to undo what the right hon. Gentleman had done.

Mr. Mitchison: I hope that the hon. Gentleman will remind the Committee that that was made at the time expressly in connection with two other increases, one of which was the child allowance. I forget what was the other; but there were two£10 increases. That was the reason for it.

Mr. Brooke: It will not have escaped the hon. and learned Gentleman that in this Budget both the personal allowance and the child allowance are being increased. My right hon. Friend is acting perfectly reasonably.
The right hon. and learned Gentleman who moved this Amendment used his words skilfully to suggest that people were having something taken away from them. In fact, everybody now paying tax is under this Bill having something given back to him. No one is paying more tax than hitherto. All these reduced rates are, in fact, going down by 3d.
The right hon. and learned Gentleman further stated that the taxpayers would have to pay on these new rates at an income£40 earlier than at present. There too, of course, he was wrong because he had overlooked the change in the personal allowance. Every married man will


get an increased personal allowance of£30 and, therefore, he will not have to pay at a higher rate of tax£40 earlier than at present, but at only£10 earlier than at present. I grant that on that tiny slice of his income, he has to pay at the higher rate, but he nevertheless gets the benefit of having the additional£30 entirely free of tax, whereas, hitherto, he has been paying tax on it.
The purpose of the Amendment is, I think, to make sure that everybody gets a fair crack of the whip under this Budget. The right hon. and learned Gentleman used a different phrase, but he was concerned to argue that both those paying at the lower rate and those paying at the higher rate should be equally fairly treated. Let us consider for a moment what would happen if one made precisely proportionate reductions in the reduced rates.
The Chancellor is cutting down the standard rate by one-eighteenth, and if he were applying the same proportion to the highest of the reduced rates—7s.—he would be fixing it at 6s. 7⅓ d., which is almost exactly what the Amendment suggests. If he applied the one-eighteenth reduction to the middle rate—now 5s.—he would arrive at the figure of 4s. 8⅔ d., which is very near the 4s. 9d. proposed. If he applied the one-eighteenth cut to the lowest rate—now 2s. 6d.—he would get to a figure of 2s. 4⅓ d.
I am sure that all of us, on both sides of the Committee, would agree that we should be putting an impossible burden on Somerset House and the tax inspectors and collectors if we were to introduce thirds of a penny into our rates. The Committee will notice that what the Chancellor has done is to reduce the lowest of these rates—the 2s. 6d. rate—by substantially more proportionately than the one-eighteenth which he would maintain if he were keeping the proportion the same throughout. He is treating most generously those who are small taxpayers with incomes of limited size, who do not pay at anything higher than the lowest of the three rates.
The middle rate is kept almost exactly to the correct proportion. The highest of the three rates is, I grant, not cut down by quite so much, but all the people who are paying at that rate will have the benefit of the lower rates and also of the

increased personal allowance, so that, in fact, justice is done to everybody.
It would, as I have said, not only cost the sum I have mentioned had the 6d. reduction been carried throughout, but it also would be a contravention of the general principle, which has been accepted in many previous Budgets, that changes in the reduced rates should be proportionate to the changes in the standard rate. We cannot play about with these figures except at the risk of getting the line of gradation for different taxpayers out of proportion. These proposals were very carefully considered and I commend them to the Committee.

Mr. Mitchison: The hon. Gentleman has not answered one simple question. He appears to have been so obsessed by proportions and grossly improper fractions that he has not answered a very simple point. Last time the "tanner" was passed on to these people; why cannot he pass the "tanner" on this time?

Mr. Brooke: In 1951, the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell), somewhat cruelly, as we think on this side of the Committee, put a "tanner" on everybody, the weaker as well as the stronger taxpayers. My right hon. Friend was determined to correct that as soon as he could, and he took the "tanner" off everybody, thereby bringing things back to the point at which they were before. Having then got the gradation right he considered that, at any rate in this Budget, the right thing to do was to adhere to the general principle accepted year after year by Committees in this House in pre-war Budgets.

Amendment negatived.

Motion made, and Question proposed, That the Clause stand part of the Bill.

Mr. E. Fletcher: One of the great difficulties facing the Committee this year in examining the Budget is the speed at which we are having to pass from one stage of the Bill to another. Never before has it happened that, when changes of such proportions in the Income Tax structure have been introduced by a Budget, we have had to proceed from discussing the Budget Resolutions one week to discussing details of the Finance Bill the following week.
That has to be added to the special disadvantage which confronts the Opposition


this year in finding the Budget Resolutions so tightly drawn that it has been virtually impossible to put down any Amendments which are in order, with the result that in under five hours we have disposed of all the Amendments on the Order Paper which have been accepted by the Chair and have reached the stage of considering the Question, That this Clause stand part of the Bill. That Question alone gives us the opportunity of trying to clear up some of the astoundingly complex figures which we heard on Monday and today from the Chancellor and the Financial Secretary.
Earlier today the Financial Secretary tried to explain to the Committee the merits of what he called the band proposal, whereby the band, which used to be£100, which attracted the lowest rate of Income Tax, was reduced to£60. I want to give the Chancellor full credit here, because I had occasion earlier in our Budget deliberations to criticise the proposal on the ground that it did not give adequate remission of taxes to the family man with three children.
The Chancellor will recall that he took credit in his Budget statement for having accepted in spirit the Royal Commission recommendations about married couples with children. He took credit for having devised a better method of securing the desired results than that preferred by the Royal Commission. I want to examine that claim, and I want to say to the Chancellor in all fairness that his method is certainly, qua method, a simpler and more satisfactory way of carrying out the findings of the Royal Commission. I refer to the recommendation that the disparity which has grown up over the years, as a result of inflation, by which the married man with children is now paying far more in tax when compared with the single man or with the married couple without children, should be corrected.
There still remains on this subject a very important question which should be cleared up. Nothing we have yet heard indicates that the Chancellor's proposals go to the full extent of the recommendations put forward by the Royal Commission. He claims to have invented a better method, and I am prepared to grant that. My criticism is that in this Budget proposal he has not carried out to the full extent the recommendations made by the

Royal Commission. I do not think enough weight has been given to that criticism in the debate.
The principle on which the Royal Commission proceeded was that at the very least the same proportion should be maintained in our tax system between, on the one hand, the burden imposed on the single man and, on the other hand, the burden imposed on the married man with a family. That was the principle, and I understood that the Chancellor did not dissent from it. He claimed to have assisted the family, but has he assisted them to the full extent? We have not yet had figures to show that he has, and it does not seem that he has gone far enough.
I doubt very much whether, even before the war, in the days before inflation distorted the comparison, it was true to say that the married man with a family was fairly treated compared with the single man. Such disparity as existed was considerably increased and exaggerated by the inflation.
7.45 p.m.
What is the position today? If we turn to the Financial Statement we can see the result of the Chancellor's Budget proposals. I have taken examples at random because I think this proposal ought to be tested. On pages 20 and 21, for example, we find that a married couple without children, earning£700 a year, pay£74 5s. in Income Tax, whereas a married couple with one child pay£41 1s. In other words, the married man has a cash benefit of£33 because he has one child. The figures increases very slightly as we go up the scale. For example, a married man earning£800 a year has a benefit, as a result of having one child, of£35, and a married man earning£1,000 has a cash benefit, in similar circumstances, of£42.
Is that considered adequate in terms of our present money value? The Chancellor of the Exchequer, quite rightly I think, attaches importance to the incentive motive behind his Budget. Nothing is more important to our national economy in these days, when full employment is so important and when we want all the employable hands we can get, than to give a full incentive to married people who want to have children but who are in difficult financial circumstances.
You know as well as I, Sir Rhys, the cost of bringing up children these days. The cost has risen. The cost of educating and maintaining children, as the Chancellor knows, is an even greater burden on those earning incomes between£1,000 and£1,500 or between£1,000 and£2,000 than it is on those in the lower range of incomes. But whatever point in the range we consider, we find, in my view, that there are still inadequate differentials for the family man compared with the single person or the married couple without children.
When I find that a married man earning£800 a year, with one child, is only£35 better off than a married man without children, and the proportion is the same for a single person, then I think the question which the Committee should ask itself is whether that is adequate. It would not cost the Chancellor very much to increase the child allowance. One of the Amendments which we put down and which we hoped would be called, but which was not called, was a proposal to increase the child allowance. We wanted to argue that it should be increased not merely from£85 to£100 but to£120 a year, which would give effect to the Royal Commission's recommendation. I think Clause 2 is defective in this and many other respects.
It is particularly unfortunate that when, as the Financial Secretary was claiming just now, the Government try to take credit for having evened out the progressive scale of taxation and to have produced relative justice at all stages, we on this side of the Committee should be deprived of the full opportunities usually afforded the Opposition of examining with care and attention the detailed Amendments which we believe necessary to give effect to our beliefs and policies.
We have made our protest and I have no doubt that the country will observe that protest. We are entitled, in considering Clause 2, to ask the Chancellor for some further figures than we have yet had. What, in his mind, is the principle governing the point at which a child allowance is given? Why has he increased it from£85 to£100, but not to£120? Does he consider that£33 a year in the case of a married couple with an income of£700 a year is the cost of a child, that

£66 is the cost of maintaining and educating two children, and that£99 is the cost of educating and maintaining three children? If so, those figures only need stating to enable one to point out that the reverse must be the case.
In fact, as the family increases, so does the burden on the father of the family. He not only has the direct cost of maintaining, clothing and educating the children, but has to live in a larger flat, or house, with a higher rent to pay, and higher rates. Frequently the mother of a large family is unable to contribute to the family resources in the same way as a married woman with only one child can, and certainly in the way in which a married woman with no children is able to contribute. The fact that married women without children are able to obtain employment is, in present conditions, of very considerable assistance to our national economy and national production efforts, but that trend can be pushed too far. It is equally necessary to secure the well-being of the generation of the future.
We had some statements made by the Minister of Education yesterday—conceived, I thought, in the right spirit—but there is still a long way to go if the Government are to use the very flexible weapon of the Income Tax structure to give a full and adequate measure of equality and social justice, about which the Chancellor was speaking just now in such glowing terms, to the married man with a large family in comparison with the single man.
My criticism is that the Chancellor has not carried out the recommendations of the Royal Commission to anything like their full extent in this matter. He is not entitled to claim credit for having given special relief to the family man. His proposals will leave a great deal to be desired if full justice is to be done to people with large families in comparison with single persons. That is the burden of my criticism on Clause 2.

Mr. Mitchison: This is a matter of reliefs. When the Budget appeared, my local paper asked me to comment. When the General Election date was announced I was also asked to comment. My first comment was that we would get a half-baked Budget. We did. It was said to be of a "classical purity and simplicity":


I think it was better described as half-baked.
We then came to the Finance Bill. I doubt whether the Finance Bill was half-baked. I think it was burnt to bits. When the hon. Gentleman defends an inexcusable injustice to the lower range of taxpayers by some exceedingly bad arithmetic and all he and his right hon. Friend can rely on is a reversion to a tradition which does not exist, I would simply tell him that the tradition to which he is reverting goes back much further. It was King Alfred who burnt the scones. This time the Tory Party has been burning the country's finances. If ever a Finance Bill was calculated to promote injustice, if ever a Finance Bill was calculated to give all to those who have something already and hardly anything to those who have not, this is that Finance Bill.
To add to that, on this Clause, which deals with reliefs—the things that matter to the ordinary man and do not apply to limited companies—we have been restricted by the Resolutions of the Government to practically no discussion at all. That is the way to deprive this Parliament of any effectiveness at all. If at this hour of the day, in the first Committee on the Finance Bill, our main object is to try to wake up the Treasury Bench, what a pretty pass we have come to. What about democracy? What about our control over finances? What about certain protests over cheap money, which finally resulted in a few heads rolling from the scaffold? If the Government want their heads cut off—governmentally of course, Sir Rhys—this is the way to do it.
It is a farce continuing to discuss this Clause, or indeed, this Finance Bill, under the iniquitous restrictions that have been put upon us. It is grossly unfair to the country that we should be asked to accept the burnt proposals which have been put before us by the Government, which themselves represent an injustice to the people who are to vote on 26th May and who will, I hope, kick the Government out, hard.

Mr. Brooke: The hon. and learned Member for Kettering (Mr. Mitchison) has used inflammatory language, but I have not noticed that the atmosphere in this Chamber has been getting anywhere near explosion point in our recent debates on the Budget. Maybe he will have greater success in the market places of Kettering

in collecting crowds and arousing them than it is perhaps possible to do on these rather sparsely occupied benches.
I want to take very seriously the speech made by the hon. Member for Islington, East (Mr. E. Fletcher). I feel sure my right hon. Friend would take no exception to anything he said, apart from one or two party jabs which he introduced. I can give a few party jabs back, if need be. The hon. Member said that the child allowance ought now to be£120. I remember that in 1953, and again in 1954, the Opposition was urging that it should be£100. Now that my right hon. Friend has made it£100, somebody is bidding higher.

Mr. E. Fletcher: The point is that it ought to rise to keep pace with inflation. If£100 was the right figure last year, this year the figure should be more than£100.

Mr. Brooke: I congratulate the hon. Member on his attempt at a get out. It is interesting to see what the trends have been. The hon. Member may remember that back in the 1920s, when the married person's allowance was£225—a figure which we are only just now reaching and surpassing in this year's Budget—the child allowance was£36 for the first child and£27 for other children.
8.0 p.m.
It seems to me wholly right that the House of Commons, year by year, has been setting a higher value on the importance of bringing up children and educating them. Indeed, it is a source of pride to me that, in the course of these four Budgets which my right hon. Friend has introduced, whereas the personal allowances for single people and for married people have been increased by 26 or 27 per cent., the child allowance has been increased by no less than 43 per cent.
The hon. Gentleman said that it would not cost very much to put it up higher. In fact, the increase embodied in this Finance Bill costs£18 million in a full year, and I am advised that, to meet the suggestion in the Amendment which would raise the allowance by a further£20 to£120, would cost another£20 million, so that one is not here dealing with small figures. One has to bear in mind that they are substantial.
Nevertheless, I am sure that all hon. and right hon. Members have a great deal of sympathy with the cogent case which


the Royal Commission has made in favour of treating the family man not quite so severely in relation to the Income Tax and Surtax that he has to pay. The hon. Gentleman will I trust grant me that a further valuable step forward has been taken in this Budget. None of us can forecast the future, but I am quite sure that if my right hon. Friend finds himself, as no doubt he will, a year hence in the same position, he will give very sympathetic consideration to the family man.
Question put and agreed to.
Clause ordered to stand part of the Bill.
Clause 3 ordered to stand part of the Bill.
Schedule agreed to.
Bill reported, without Amendment; to be read the Third time Tomorrow.

Orders of the Day — NATIONAL INSURANCE (No. 2) BILL

Considered in Committee; reported without Amendment; read the Third time and passed.

Orders of the Day — PUBLIC LIBRARIES (SCOTLAND) BILL

Not amended (in the Standing Committee), considered; read the Third time and passed.

Orders of the Day — ADJOURNMENT

Resolved, That this House do now adjourn.—[Colonel J. H. Harrison.]

Adjourned accordingly at five minutes past Eight o'clock.